Get Out Of Being Guarantor ?

[EDDIE51]

My neighbour agreed to be guarantor for a loan to another person.
How ever the neighbor has lost his job and so no longer fits the criteria to be a guarantor. The person who has the loan has not paid on several occasions and my neighbour has had the cash taken from his bank account. He just can no longer afford to do this as he has no income apart from JSA.
Is there a legal way he can get out of being guarantor ? as he just can not afford it any more. The person who had the loan refuses to do anything and will not even answer the phone or reply to letters.

[Buenchico]

Hi Eddie.

>>>Is there a legal way he can get out of being guarantor ?

No. If there was, guarantees would be worthless.

The first thing your neighbour needs to do is to accept that he'll have to pay the money back. However that doesn't mean that he has to pay it back at the same rate that the original debtor was meant to. He should cancel the direct debit with his bank and then write to the lender. That letter should acknowledge the debt, but also explain his current financial situation and offer to pay a nominal sum (perhaps £5 or £10 per month) until such time as his circumstances improve.

On receipt of such a letter many lenders will freeze the interest and accept the lower payments (possibly after requiring that a full financial statement to be submitted). They don't so out of any great generosity towards debtors; they simply accept that 'you can't get blood out of a stone'.

If the lender decides not to accept the offer of lower payments, all they can do is take your friend to court to seek a County Court Judgement against him. The judge would listen to his circumstances and make an order requiring your neighbour to repay the money at a rate set by the judge (and, importantly, at a rate which your neighbour can actually afford). As long as your neighbour then keeps those reduced payments up, there's nothing further that the lender can do.

Chris

[EDDIE51]

Thanks Chris more or less what I thought.
Only problem is that the payments are from his debit card not via DD. He must have given an authority to charge his card for the payments.

[Buenchico]

Thanks for your reply.

This might be relevant:
http://www.guardian.co.uk/money/2012/feb/24/continuous-payments-authority-know-your-rights

[themas]

Eddie

1. Your neighbour could go to the CAB. They should be able to give him pro-forma letters to cancel the continuous payment authority - one to go to the bank & one to the creditor. These should be operative immediately they arew received.

2. Or he can cancel his debit card & get a new one with a different number. He must let the bank know & make sure they will not honour any further requests for payment on the cancelled card.

[EDDIE51]

Thanks people, he has now cancelled the card and written a letter to the loan company saying that he can not afford more than £20 a month but accepts the debt. We will see what happens.