When deciding to act as a guarantor for a loan agreement, well assess the consequences of such a step. The fact is that the guarantor and the borrower are equally responsible for the obligations to the credit institution, therefore, if the borrower violates the terms of the contract, the entire burden of debt repayment will fall on the shoulders of the guarantors. However, the legislation provides for individual cases when it is possible to terminate the surety agreement.
Instructions
Step 1
Study the surety agreement attached to the loan agreement well before signing it. Make sure that the provisions of the document do not violate your rights, and that payments of the principal and interest on it are not overstated and, if the contract enters into force, may be feasible for you as a guarantor. The surety agreement signed by you will subsequently be very difficult to challenge in court.
Step 2
To legally stop being a surety, wait until the end of the relevant contract. In this case, your obligations will be terminated, even if the borrower has not fully repaid the loan by this date. If the term of its validity is not determined by the agreement, the surety will be terminated automatically if there are no claims against the guarantors from the credit institution within a year.
Step 3
Submit a claim to the court to terminate the surety agreement if you become aware that the credit institution, without your consent, has made amendments to the agreement that infringe on the rights of the surety. Such changes can be an increase in the loan amount or an increase in the interest rate on the loan. To take advantage of this opportunity in a timely manner, keep in touch with the borrower and ask him to inform you about the changes made to the loan agreement after its conclusion.
Step 4
Check with a qualified legal practitioner for any special circumstances that may lead to the termination of your surety agreement. This, as a rule, requires the onset of adverse consequences that are beyond your will and desire. The courts consider such claims, but the decision, unfortunately, is not always made in favor of the surety.
Step 5
Consider transferring obligations under a surety agreement to another person or organization. This requires the consent of all interested parties, so be prepared for difficult negotiations with the borrower, lending institution and potential new guarantor.
Step 6
And finally, use the easiest way to terminate your surety, that is, wait for the borrower to fully repay his debt to the lender. Termination of the loan agreement, as a rule, leads to the completion of the obligations assumed by the guarantors.
