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Difference between revisions of "Co-signing, Guarantees and Joint Debts"
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Co-signing, Guarantees and Joint Debts (view source)
Revision as of 22:27, 16 September 2018
, 22:27, 16 September 2018no edit summary
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==== Guarantors==== | ==== Guarantors==== | ||
A guarantor’s responsibility for a debt only comes into effect '''if''' the principal debtor defaults on an obligation. The law allows certain defences and remedies for guarantors that are not open to joint debtors. | A guarantor’s responsibility for a debt only comes into effect '''if''' the principal debtor defaults on an obligation. The law allows certain [[Contract Defences|defences]] and [[Contract Remedies|remedies]] for guarantors that are not open to joint debtors. | ||
The most significant defence principle says that if the creditor and principal debtor make significant changes to the detriment of the guarantor in the credit contract (before or after the principal debtor’s default), then the guarantor may be able to get out of paying off the debt. For example, if a creditor lowers the monthly payments for a principal debtor having trouble making the full payments called for under the loan agreement, the creditor may wait a long period after default to start legal action against the guarantor. The courts may find this prejudicial enough to the guarantor to disallow the claim against the guarantor. | The most significant defence principle says that if the creditor and principal debtor make significant changes to the detriment of the guarantor in the credit contract (before or after the principal debtor’s default), then the guarantor may be able to get out of paying off the debt. For example, if a creditor lowers the monthly payments for a principal debtor having trouble making the full payments called for under the loan agreement, the creditor may wait a long period after default to start legal action against the guarantor. The courts may find this prejudicial enough to the guarantor to disallow the claim against the guarantor. | ||