Guarantor on friends loan who now has a DRO

andywhite50

I have a question regarding a guarantor loan I’m involved with for a friend.

Last year I agreed to be a guarantor for an Amigo loan for 10K and all the paperwork was done etc and everything was set up and she was paying ok for a few months then maybe paid late and then after a few days made the payment, in October last year I received an email and letter from Amigo saying she had successfully got a DRO which I had no idea about which was a big shock as she hadn’t told me so which meant I was now responsible for paying the loan but she said she would pay me each month so I could pay Amigo out of the £396 she has and agreed to pay me and has been doing since October last year but with a payment plan of £169 per month over 10 years.

I contacted the insolvency service regarding these payment to me and I was told that under her DRO she isn’t allowed fo pay me this money, the Insolvency service asked me details for the loan which was 10k but according to her DRO she put down £1000 and not ten thousand pounds so they said under law she is liable for the £9000 as it’s not listed in her DRO, so she has given false information on her DRO and according to the Insolvency served and the CAB she should be responsible for that outstanding money and not me. The insolvency service has emailed Amigo on a couple of occasions this week to tell them that.

On Thursday I received and email from Amigo telling me

“We are getting in contact with the DRO unit and seeing what we can do on our side, but please note that this is a civil matter and you are still liable for the repayments on the loan.

Should you fail to maintain your agreement to us, this could result in further action being take against yourself, such as the account being submitted to court and put before an independent judge. They could issue you with a CCJ which will affect your credit rating and remain on your credit file for up to 6 years. If the CCJ isn't upheld, we could apply for an Attachment of Earnings, or a Property Charging Order on any property you may own to settle the debt.

Please note, Michelle is still unable to afford the repayments to us regardless of the outcome with the DRO unit. We will support you with any information you need from us if you would like to pursue this as a civil matter, but you will still be expected to maintain payments on this account as Michelle is not in a position to do this, as she had to be made insolvent and placed on a DRO”

My friend Michelle has been paying me £397 for the last 6 months so she can afford to pay it.

The Insolvency Service is a government body and amigo aren’t going by the rules laid down by the Insolvency service,

Please can you tell me where I stand?

Thanks,

Andy

Louoffofsparkle

The trouble is you signed an agreement to pay if she couldn’t. As she isn’t paying amigo the contracted amount it falls to you.
And I think you need to realise she is not any type of friend.

Craig1981

doesnt mtter if it is included in the DRO, if DRO is now cancelled, or if Amigo declare they only write off £1k instead of all the loan. at the end of the day, you will owe amigo the amount outstanding, regardless of what happens with the DRO

may be best to try get a loan out in your name at a better APR than 49.9%, clear the amigo loan and try as best you can to get your friend to continue paying what she can to you, but i would write it off to a hard learnt lesson

any payments given by your friend now, count as a bonus

andywhite50

But the insolvency service say she is now responsible for the 9K as she didn’t disclose the right amount on the DRO and that to my mind isn’t allowed under her DRO and states if you don’t declare all the details of your debts it’s a criminal offence.

andywhite50

The DRO isn’t cancelled, it’s 6 months into it

Nasqueron

Regardless of what has been said, the point of guarantor loans is that you pay if she doesn't. If you step back a bit - who is going to need a loan with terrible APR and a guarantor? Someone with awful credit history with a history of not paying back what she owes who mainstream lenders wouldn't touch with a bargepole. If you're asked to be a guarantor you're basically signing up to pay her debts WHEN (not if) she defaults - that's how they ensure they get their money. If you wanted to help her, you should have got a loan out and given it to her so at least it would be sensible APR.

MEM62

andywhite50 wrote: »

But the insolvency service say she is now responsible for the 9K as she didn’t disclose the right amount on the DRO and that to my mind isn’t allowed under her DRO and states if you don’t declare all the details of your debts it’s a criminal offence.

Ultimately she may be liable but that does not help you in the short term.

You have an agreement with Amigo to pick up the payments if she is not making them. That agreement is between you and Amigo and cannot be voided by the fact that a third party (your friend) lied on her DRO application. You will have to settle the loan with Amigo as you have undertaken to do.

It will then be your problem to recover the amount under any liability that you friend may have for the debt. This is not Amigo's problem - as guarantor you let them off the hook.

I appreciate that this is a hard pill to swallow. That is why there are so may posts on these forums explaining to people that, under no circumstances, should you be a guarantor. The fact that your friend needed this type of loan is because the mainstream lenders decided that she was not a good risk and would not pay it back. As you have now discovered, their assessment of risk was right. What on earth makes potential guarantors feel that they know better escapes me.

foxy-stoat

Try and get a £10,000 loan yourself or a few money transfer and balance transfer credit cards and try and clear your Amigo loan to reduce the 50% interest you paying - your "friend" has clearly dumped on you from a great height.

It will save you money in the long run.

Good luck

mjm3346

andywhite50 wrote: »

But the insolvency service say she is now responsible for the 9K as she didn’t disclose the right amount on the DRO and that to my mind isn’t allowed under her DRO and states if you don’t declare all the details of your debts it’s a criminal offence.

Simply put - In or out of the DRO or even her doing jail time does not remove your obligation to pay.

foxy-stoat

mjm3346 wrote: »

Simply put - In or out of the DRO or even her doing jail time does not remove your obligation to pay.

Unfortunately it was never an obligation for the "friend" to pay for the OP's loan.

Sickening....what did the £10,000 get spent on?

sourcrates

I have to say that by you contacting the insolvency service and spilling the beans on her, you may have shot yourself in the foot.


Despite what she may or may not have told the IS, you were been paid by her, to make the loan repayments, i suspect that arrangement will now end, and you will now have to find the full amount yourself.


Regardless of what she may have done, you remain 100% liable as you signed as guarentor for her loan, the circumstances do not matter one bit unfortunatly.