You will need
- - a guarantee agreement;
- - credit agreement.
In order to understand under what circumstances the guarantor may not pay the loan for the borrower should carefully examine the contract of guarantee. It should be spelled out the rights and obligations of the guarantor, and the mechanism of refund. A contract of guarantee may provide for solidarity and subsidiary responsibility. In the first case, the Bank immediately shifts the responsibility on the guarantor, if the borrower stopped paying on the loan. Vicarious liability is more favorable to the guarantor and is extremely rare. In this case, the Bank must verify the uncollectibility of the loan from the borrower, and only then turn to the surety.
From guarantee on someone else's credit to get quite difficult. Obligations do not stop even if the divorce or death of the borrower. Although in the latter case, the practice of law is ambiguous. There is a Supreme court decision which recognizes that the death of the borrower releases the surety from paying the debt to the creditor. In other situations, the termination of obligations as guarantor must obtain the consent of the Bank. They, in turn, rarely going to change the terms of the loan agreement, because it reduces the chances of return of borrowed funds.
Situations under which you can legally avoid payment on a foreign loan, as guarantor, very little. One of them is the Statute of limitations. By law the Bank can recover funds from the guarantors only for six months (less the period of limitation under the credit agreement up to 3 years). And if the guarantee contract does not provide for another term, after 6 months to compensate for the amount of credit for the account of the guarantors will be impossible.
Another case when you can get rid of the payments under the guarantee agreement, is the contract null and void. For example, because of incapacity of the guarantor. For this parents (relatives) it is necessary to address in court with the corresponding statement.
If the borrower and the guarantor do not fulfill the terms of the loan agreement, despite the requirements of the Bank, he goes to court. Then the punishment will be given to the property of the surety, or the court rules to make deductions from wages. This debt will be impossible to return through a single housing of the guarantor, household items, food, social benefits. The size of deductions from wages may not exceed 50% of the remuneration of the employee, and he must be not less than the amount of the minimum wage (R. 5554). But if the surety pays child support and includes disabled parents, then income to foreclosure may not be at all.
Even if the surety had to pay the loan instead of the borrower, then it is possible to compensate all their losses. In this case, the surety becomes a creditor of the borrower and has the right to require the return of all costs for the payment of principal and interest on the loan in court. You only need to request in Bank the documents that confirm the fulfilment of the obligations of the borrower. The guarantor also may request in court the borrower to repay the loan on their own.
Before you agree to become a guarantor for the loan, evaluate your financial ability to pay the monthly payments for the borrower.