January 26 2015
While guarantees are a very useful tool, particularly for a debtor wanting to ‘get ahead’, as guarantor you should be cautious about entering into a contract such as this, particularly for large sums of money – the consequences of your liability being called upon can be significant. Make sure you have all relevant information about the debtor and the debt itself; not only initially but also on a continuing basis. Ensure you have carefully weighed the potential risks involved against the benefit to be gained by a debtor (usually from having access to a loan) before ultimately deciding whether you ‘go guarantor’. This is not a decision to be taken lightly. Guarantees are legally binding documents enforceable through the courts.
If you’re unsure about becoming a guarantor and would like some guidance, do get in touch with us.