A Guarantee - One Signature That Hands You Someone Else's Whole Loan
A guarantee is often treated as a formality: a relative or friend needs a loan, the bank asks for a guarantor, and the signature becomes a gesture of goodwill. In law that signature creates a new debtor: under a joint guarantee the bank may demand the whole sum directly from the guarantor - without dealing with the principal borrower first and without waiting for their property to be sold. And that demand is enforced exactly like your own loan: a frozen account, deductions from wages, an inventory of your property.
This page sets out what guarantors learn too late and what they can still do: how joint and subsidiary guarantees differ, which limits and time periods apply, why a change to the loan terms without the guarantor's consent releases them, what rights the guarantor has against the bank and how recourse against the borrower works. Plus a separate layer: encumbering property for someone else's debt and what happens to a guarantee in an estate. Penalty recalculation and restructuring have their own pages.
Types of Guarantee and What Each Changes
One word in the guarantee agreement decides whether the bank comes straight to you or to the borrower first - and that word has to be read before signing.
Defending a Guarantor - From the Bank's First Demand to Recourse
Analysing the guarantee agreement
Joint or subsidiary, fixed-term or open-ended, limited to what sum, covering which obligations (this loan only or all future ones), whether there is a "blanket" clause for future liabilities. The lawyer's first conclusion comes from here - the demand often goes beyond the agreement itself.
Testing the principal obligation
The guarantor answers for what the borrower owes - no more. That means recalculating the debt under the caps (penalties at 0.27% per day and 1.5 times the principal in total, effective rate at 50%), checking limitation and reviewing the payment history. If the borrower's debt falls, the guarantor's liability falls with it.
Searching for changes to the terms
This is the guarantor's main line of defence: if the bank changed the loan terms - extended the term, increased the sum, raised the rate, executed a restructuring - without the guarantor's consent, the guarantor does not answer for the increased obligation and in some cases is released altogether. That is exactly why the lawyer requests the loan's full history from the bank.
Putting the position to the bank
A written reply to the bank: a legal and numerical challenge to the demand, a request for information (agreement, amendments, statement), and an offer where payment is realistic. Oral agreement and "a partial payment to keep talking" are dangerous for a guarantor - they confirm the obligation.
Defence in court and in enforcement
A defence to the bank's claim: the scope of the guarantee, the changed terms, the recalculation, limitation. At the enforcement stage - the statutory caps on deductions from accounts and wages, challenges to the inventory of property, protection of a sole vehicle or subsistence income within the statutory limits.
Recourse against the borrower
What the guarantor pays is recoverable in full from the principal borrower - a separate claim built on the payment documents. The lawyer files recourse as soon as payment is made and seeks security over the borrower's property - recourse that surfaces years later is often already uncollectable.
When a Guarantor Is Released - Three Real Grounds
The first and most common is a change to the obligation without the guarantor's consent. The guarantor consented to a specific obligation: a specific sum, term, rate and schedule. When the bank and the borrower later change those terms - extend the term, increase the sum, execute a restructuring, draw a new tranche - the guarantor does not answer for that new, increased obligation. Where the change alters the substance of the obligation, the guarantee may terminate entirely. That is why the lawyer requests every supplementary agreement from the bank and compares the dates against the guarantee.
The second is conduct by the bank that destroys the security. If the bank released or lost security the guarantor was relying on (removed the borrower's mortgage or cancelled a pledge, for example), the guarantor is released to the extent they would have recovered from that security on recourse. The logic is straightforward: the guarantor signed up to a picture in which the flat also stood as security, and the bank changed that picture itself.
The third is the term and limitation. Under a fixed-term guarantee the bank must bring its claim within the term; expiry extinguishes it. Separately, limitation on the principal obligation applies - if the claim against the borrower is time-barred, the guarantor may say so. In both cases it is critical that the guarantor does not acknowledge the debt or make even a partial payment "in good faith" - such conduct restarts the periods and destroys the defence.
What a Guarantor's Case Rests On
- The same extent
- A guarantor answers to the same extent as the principal borrower - including interest and penalties, unless the agreement limits it. That also means every recalculation of the debt (caps, limitation) applies to the guarantor too.
- The borrower's defences
- A guarantor may raise against the bank every defence available to the principal borrower: recalculation, limitation, voidness of a contractual term, partial payment. A guarantor is not a "weak defendant".
- Right to information
- A guarantor is entitled to information from the bank on the state of the principal obligation - the balance, the arrears, any amendments. It is precisely that information which reveals the change of terms that grounds a release.
- Recourse
- Sums paid are recoverable in full from the principal borrower, with costs and interest; the bank's security rights pass to the guarantor to the extent of the payment. Recourse has its own limitation period.
- Several guarantors
- Where there are several guarantors, the bank may claim the whole sum from any of them (under a joint guarantee); the paying guarantor then has a proportionate claim against the others - a separate action that is often forgotten.
- Inheritance
- A guarantee as a rule passes into the estate - but only to the extent of the obligation that had arisen by the date of death and within the value of the estate. An heir must check the guarantee agreement and its scope separately.
What to Check Before You Sign a Guarantee
- Joint or subsidiary - that one word decides whether the bank comes straight to you or to the borrower first.
- Monetary limit and term: ask for a cap in a specific sum and a fixed term - "the whole obligation, open-ended" is the worst version.
- What it covers: this loan only or future liabilities too (a "blanket" clause) - in the latter case the signature is an unlimited risk.
- A clause on changes of terms: ask for wording that any change requires your written consent.
- The borrower's real position: income, other debts, credit history - a guarantor sees this worse than the bank yet takes the same risk.
- What security the bank holds from the borrower - and a clause that releasing it reduces your liability accordingly.
Three Guarantee Cases
A restructuring never agreed with the guarantor
The bank demanded the full sum from the guarantor of a brother's loan. The lawyer requested the loan's full history from the bank: the loan had been restructured twice - the term extended and the sum increased - without the guarantor's consent. The defence pleaded release from the increased obligation and a recalculation under the caps. The court limited the claim to the original obligation and the sum fell to a third.
A flat mortgaged for someone else's loan
A pensioner mortgaged her flat for her grandson's business loan; the loan defaulted and the bank started enforcement. The lawyer: the agreement contained no separate guarantee - liability was limited to the value of the property (no residual debt for the pensioner); the debt was reduced on recalculation and cleared by a voluntary sale of the flat. The pensioner kept her other property and her pension.
Recourse brought in time
A guarantor paid 18,000 lari on a friend's loan and then waited three years on the basis that "we will sort it out". The lawyer: a recourse claim on the payment documents, a check of the limitation period (it had not yet expired) and a motion for an injunction over the borrower's property filed with the claim. The sum was awarded in full and enforced against a car and wages. Another year's delay and the borrower would have disposed of the assets.
Questions About Guarantees
The borrower has property. Why is the bank not claiming from them first?
Because under a joint guarantee it does not have to: the bank may choose whom to claim from - and it usually chooses whoever is easier to collect from (wages, an account, property in the registry). You can change that only by contract (a subsidiary guarantee); after the event, only through recourse: you pay the bank and recover in full from the borrower.
Five years after I signed, the loan was extended. Am I still a guarantor?
This is exactly where a guarantor's protection is strongest: extending the term, increasing the sum or changing the rate without your written consent means you do not answer for the increased obligation, and where the substance of the obligation changes the guarantee may terminate altogether. The lawyer requests every supplementary agreement from the bank and compares the dates - that is where the ground for release appears.
The bank has started deducting from my wages. Will they take everything?
No - deductions from wages in enforcement are capped by law and the subsistence minimum is protected, as are certain social payments. The lawyer checks whether the Bureau is observing those caps (often it is not, especially where there are several enforcement files) and demands a recalculation; in parallel, agreeing a schedule with the bank often reduces the monthly burden.
The borrower has died. Does the guarantee end?
No - a guarantee follows the principal obligation, and the debt passes into the estate; the bank may claim from the guarantor. But two things matter: the heirs answer for the debt only within the value of the estate, and a guarantor who pays has recourse against the estate - that is, against the heirs within the same limits. The lawyer aligns the recourse with the inheritance deadlines, otherwise the property will already have been divided.
Can I get out of a guarantee?
Not unilaterally: a guarantee is a contract with the bank and terminating it requires the bank's consent. The realistic routes: the borrower offers the bank another guarantor or security in your place; the loan is refinanced with another bank without you; or, with a fixed-term guarantee, you wait for the term to expire. The lawyer puts these three options to the bank in writing - banks sometimes agree where the borrower's position has improved.
Lawyers for Guarantee Cases
In a guarantor's case everything turns on two documents: the text of the guarantee and the history of amendments to the loan. Within 15 minutes the coordinator connects you with a lawyer who defends guarantors and brings recourse claims on a regular basis.
No published lawyers in this category yet
That does not mean we cannot help. Call us - we will match you with a specialist for a remote consultation or from a nearby city.
Call: 568 330 318Is the Bank Demanding Someone Else's Loan From You?
At a free consultation the lawyer reads the guarantee agreement, tells you whether you are a joint or subsidiary guarantor, whether the loan terms were changed without your consent and how much the claim comes to once the caps are applied. Expect the coordinator on the line 15 minutes after your request.