Sister standing guarantor for multiple loans

macman

What is the total value of the loans she has been accepted as guarantor for? How can the actual debt on the £10k loan be £24k?
I'm not clear if your sister is in employment, but on what basis are the lenders repeatedly accepting her as a guarantor for loans that she could only possibly cover if her house was to be sold? How is she passing the credit check?
If you become a guarantor, then does not his fact appear on your credit file? These type of lenders are unscrupulous, but ultimately it's not in their interest to have to recover debts from the guarantor after default.

A_Lert

Are you "joint tenants" or "tenants in common". This affects the situation if the creditor comes demanding sums of money. If you are tenants in common then if your sister becomes bankrupt, the creditors can only take her share of the house's value. Small comfort I know.

Are Amigo trying to claim the loan is secured against the property? It can't be without your consent. Though I'm not sure that practically helps much.

Hectors_House

macman said:

What is the total value of the loans she has been accepted as guarantor for? How can the actual debt on the £10k loan be £24k?
I'm not clear if your sister is in employment, but on what basis are the lenders repeatedly accepting her as a guarantor for loans that she could only possibly cover if her house was to be sold? How is she passing the credit check?
If you become a guarantor, then does not his fact appear on your credit file? These type of lenders are unscrupulous, but ultimately it's not in their interest to have to recover debts from the guarantor after default.

The interest rate on all of these loans is 54% plus they add on the costs of pursuing the borrower.

She was asked to pay about £9,700 for the £4,500 loan so that gives you some idea.

She works full time but the company have made many concessions over the years so her work isn’t stressful as it should be.

The house is mortgage free.

She had approx £15,000 of credit card and loan debt but was showing them a second bank account or their checks didn’t pick up on her debts.

Pollycat

MovingForwards said:

https://forums.moneysavingexpert.com/discussion/6214948/guarantor-loans/p1

Lots of useful information provided by people and more background provided by OP.

I'm not usually a fan of looking at posters other threads but MovingForwards is correct that there is a lot of useful information on this ^^^^ thread.

Including the OP's penultimate post (dated 26/1/21) reproduced here:

Hectors_House said:

Just a quick update for all you good folk who gave me advise.

Letters of Complaint were sent to both lenders back in early December. Amigo Loans acknowledged receipt (after asking my sister to give them permission to speak to me and her Father) and are looking into the complaint. 

Guarentormyloan bombarded my sister with phone calls and text messages trying to get her to talk to them about sorting out her issues with being able to pay. We told them it was harassment as we were seeing the effect it was having. Their solicitor told us that the borrower (who had defaulted) had agreed a payment plan up to March to catch up. My sister received a letter this morning letting her know their response (ten pages long to the Letter of Complaint) and telling her they had decided to release her from the contract as guarantor.

One down, one to go.

Considering this second loan was in default I was surprised they didn’t dig their heels in and we are thankful they didn’t.

I’ve told my sister to ignore any attempts by the Mother and daughter she stood guarantor for to contact her and to pass anything they send her onto me so I can deal with them.

From what I understand the loan reverts to an ordinary loan with a much better interest rate for the borrower if they loose their guarantor. To be honest I couldn’t give a monkeys if they face demands to pay it all back immediately   - especially the daughter who told my sister she didn’t need to worry cus she would never miss a payment and that the house wasn’t at risk if it defaulted to her to pay. My sis even has a text from this woman telling her her outgoings are £600 more than she earns each month so she couldn’t afford the loan even when she took it on.

elsien

Hectors_House said:

elsien said:

While understanding your concern about a forced sale of the house, taking half a house off her could also be construed as taking advantage. 

What are you going to put in place to protect her share? 

I will update my Will leaving the house to her. She’s my sister and I wouldn’t rip her off. I’m surprised that people could think that.

I don’t think you are wanting to rip her off, your motives are clearly in the right place. But I’m not sure you’ve thought it through. 

Although your reasons  are very different to the people taking out the loans, her agreeing to sign the house over because she doesn’t want to upset you isn’t 100 miles away from her signing to be a guarantor for her friends.
And you’re on shaky ground by querying her capacity to agree the loans but accepting her capacity to give half a house away. 

Other factors you and she may wish to consider: they have varying degrees of likelihood but they are still there.
You get married and divorced - the house is an asset.
You get into financial difficulties/ go bankrupt - the house is an asset.
You need care in later life - in some circumstances the house is an asset.

All of which could mean that circumstances overtake before getting to the will.
And what if she decides she wants to up sticks and move somewhere else, and needs her half of the house to do so? 

In your situation and with her consent I would be looking at supporting her to talk to the mental health professionals about the loans to see if they can work with her on being more assertive, or give any other help,  as a starting point. 

Has someone sat down with her and explained the potential ramifications lying on a credit application, in terms of fraud? 

Hectors_House

Thank you to everyone who has responded so far and thank you Pollycat for linking to my other post.

We’re not out of the woods yet.

Thank you Elsien for pointing out things I’d not thought about too.

Ive spoken to her today and it’s hard to bring it up cus she gets very anxious. She’s apologised and promised not to do it again but told me the majority of the loans came about because the daughter kept topping up her loan when they gave her the chance. I pointed out to her that she should have said no the first time this happened.

I’m now waiting to hear back from Guarantormyloan to confirm she has been taken off because the letter is a little unclear. We have yet to hear back from Amigo Loans.

As to her lying about not already being a guarantor that conversation can wait until I see her again. The fact that she was already was put in the Letter of Complaint that was sent to them. I suspect they realised that her situation could be a minefield for them if they forced her to take her complaint to the Financial Ombudsman.

Again, thanks to everyone for their advise.

RAS

Hi
Someone has already suggested on your other thread that you try to get your sister to register with CIFAS. That would mean that extra checks were made before she was able to take a loan or guarantee one. Suggest you go back over there and read the link.

Pollycat

Hectors_House said:

Thank you to everyone who has responded so far and thank you Pollycat for linking to my other post.

We’re not out of the woods yet.

Thank you Elsien for pointing out things I’d not thought about too.

Ive spoken to her today and it’s hard to bring it up cus she gets very anxious. She’s apologised and promised not to do it again but told me the majority of the loans came about because the daughter kept topping up her loan when they gave her the chance. I pointed out to her that she should have said no the first time this happened.

I’m now waiting to hear back from Guarantormyloan to confirm she has been taken off because the letter is a little unclear. We have yet to hear back from Amigo Loans.

As to her lying about not already being a guarantor that conversation can wait until I see her again. The fact that she was already was put in the Letter of Complaint that was sent to them. I suspect they realised that her situation could be a minefield for them if they forced her to take her complaint to the Financial Ombudsman.

Again, thanks to everyone for their advise.

Is this actually allowed (legally)?

I'd have thought (possibly naively) that if I'd agreed to be a guarantor for someone for a purchase of say £1,000 then that would have been the limit of my liability because I'd have assumed (maybe wrongly) that I would have signed up for a specific amount. Not a forever increasing amount without being asked if I consented to taking on further liability.

e.g. I might have agreed to be a guarantor for my (non-existent son) to buy a pushbike but he might have just kept increasing the amount of the loan to buy a Porsche.)

Or was your sister asked to increase her liability as the lender wanted to increase the amount of her loan and your sister agreed to it and signed to that effect.

Does this loan company have your sister's signed agreement to the full amount of all the loans she's allegedly guarantor for?

Poor lady. Not a nice situation to be in when you're already suffering from mental (and physical) illness.

A_Lert

As far as practical things for you to do:

Do not be surprised if one morning you're woken up by bailiffs banging on the door. If your sister has been ignoring the debts and hiding them from you she could easily have a court judgement against her, either already or in the future, without your knowledge.

For that scenario, make sure you have documents to prove you own anything you own. Especially cars, jewellery, consumer electronics, and anything else of high value. Bailiffs assume anything in the house belongs to the debtor unless someone else can prove otherwise. It's unfair but that's the law.

(Do not participate in any kind of schemes to hide assets that your sister does own.)

Pollycat

A_Lert said:

As far as practical things for you to do:

Do not be surprised if one morning you're woken up by bailiffs banging on the door. If your sister has been ignoring the debts and hiding them from you she could easily have a court judgement against her, either already or in the future, without your knowledge.

For that scenario, make sure you have documents to prove you own anything you own. Especially cars, jewellery, consumer electronics, and anything else of high value. Bailiffs assume anything in the house belongs to the debtor unless someone else can prove otherwise. It's unfair but that's the law.

(Do not participate in any kind of schemes to hide assets that your sister does own.)

I believe the OP does not live in the same house as the sister.