Loans and Suretyship - Debt, Interest and Someone Else's Obligation That Became Yours
A loan dispute is almost never just "getting the money back". It contains questions whose answers double or triple the amount: what interest was agreed and what the law allows; what an IOU means when the handover of money is not proved; whether the guarantor is liable when the creditor extended the borrower's term without the guarantor's consent.
This page looks at loan disputes from all three sides: the borrower asked to pay unfair interest or a sum that was never received; the guarantor who receives a letter from the enforcement bureau over someone else's debt; and the lender holding an IOU but not the money. The general steps of debt recovery are in a separate guide; here is the legal substance.
Updated · Practice area: Civil litigation lawyer
Five Typical Forms of Loan and the Legal Weight of Each
A loan is valid even when oral, but proving it is not. The form decides who proves what and within what time.
Analysing a Loan Dispute - What the Lawyer Checks at the First Consultation
Separating the agreement from proof of handover
The agreement and the actual handover of money are two separate facts. The lawyer checks which document proves what: does the IOU prove receipt or only a promise, does the transfer prove a loan or another relationship. The debtor's defence often starts here: "I signed, but I never received the money".
Recalculating interest to the statutory cap
The agreed rate is converted into an effective annual rate with all commissions and penalties. The part above the cap is void and any excess already paid is deducted from the principal. This recalculation often shows that the "debt" is already repaid, or the opposite.
Limitation and counting the period
The limitation period for a matured loan is 3 years; the debtor's acknowledgement of the debt (a partial payment, a letter, a message) restarts it. The lawyer checks whether the debtor has "revived" a time-barred debt with a single message.
Scope of the guarantor's liability
Suretyship requires written form and a stated maximum amount; without it the suretyship is void. The guarantor is liable to the extent stated in the contract and is released if the creditor increased the obligation without consent or gave up security.
Set-off and counterclaims
If the debtor has their own claim against the creditor (wages, services, another loan), set-off reduces or extinguishes the debt. The lawyer formalises the set-off declaration before court.
Restructuring or lawsuit
On the basis of the recalculated, lawful amount: a schedule, a change of security, partial forgiveness in exchange for prompt payment. Or a lawsuit and interim security if negotiation fails. For the creditor, the court route is detailed in the debt recovery guide.
You Signed a Suretyship - What Can Happen and What Rights You Have
A guarantor is liable to the creditor together with the borrower, and under a joint and several suretyship the creditor may claim from the guarantor first, without examining the borrower's assets. That means a letter from the enforcement bureau can reach the guarantor before the borrower if the guarantor has a salary and an account and the borrower does not.
But the guarantor has defences too. They may raise every defence the borrower has (limitation, void interest, set-off) even if the borrower waives them. The guarantor is released if the creditor extended the borrower's term without the guarantor's consent and this increased the risk, if the creditor gave up a mortgage or other security, or if the suretyship was for a fixed term that has expired. And the suretyship cannot exceed the maximum amount stated in the contract, whatever the borrower accumulates.
After paying, the guarantor has a right of recourse against the borrower for the full amount and costs; the creditor's rights pass to the guarantor, including security. The lawyer documents the guarantor's payment so that the recourse claim is simple and secured.
What a Loan Dispute Turns On
- Effective rate cap
- A statutory annual ceiling on the effective rate of a loan including all costs, which also applies to loans between individuals. Interest above it is void; not the whole contract, only the excess.
- Penalty limit
- Late payment penalties and interest together are capped by law; a contractual "1% per day" is not enforceable above the limit.
- 3 years
- Limitation for a loan claim from the due date; for an open-ended loan, from the expiry of a reasonable period after demand. Interrupted and restarted by acknowledgement.
- Suretyship maximum
- The upper limit that must be stated in the suretyship contract. Without it the suretyship is void; above it the creditor cannot claim from the guarantor.
- Court fee 3%
- 3% of the amount claimed in a loan lawsuit, with a minimum; less under the payment order procedure. Borne by the defendant if you win.
What to Bring to a Consultation on a Loan Dispute
- The loan agreement, IOU or correspondence showing the terms: the original, not a photo, if the signature may be disputed.
- All proof of handover and repayment: transfers, receipts, witnesses to cash handover.
- A chronology of every payment with dates; recalculating interest is impossible without it.
- The suretyship contract and every later change to the main loan, whether or not the guarantor was informed.
- The creditor's demands, notices, bureau letters: for counting deadlines and limitation.
- Security documents: mortgage, pledge, vehicle registration, registry extract.
Three Loan Disputes
A private lender at 5% a month
10,000 borrowed, 14,000 paid as interest, the lender still demands 10,000. Lawyer: the effective rate far exceeds the cap, the excess is void and is deducted from the principal. On recalculation the debt is repaid; a counterclaim for the overpayment. Result: the IOU returned and a mutual release.
A guarantor never told about the extension
The bank extended the borrower's loan by 2 years and increased the amount; the guarantor did not know. Two years later, a bureau letter to the guarantor. Lawyer: the suretyship covered the original terms, the change was made without consent, so the guarantor is free of the increased part and the term for the rest is disputed. The claim to terminate the suretyship succeeded.
An IOU without receipt of money
The client signed an IOU for a "future" loan, the money was never handed over, the relationship soured and the creditor sued. Lawyer: the IOU says "I borrowed" but shows no receipt, there is no transfer, and the creditor's finances do not support the existence of the sum. The court found the loan never concluded.
Questions About Loans and Suretyship
The IOU is handwritten and there was no notary. Is it valid?
Yes: a loan agreement does not require notarial form, and a handwritten IOU is full written evidence. A notary rules out a challenge to the signature and allows direct enforcement, but their absence does not invalidate the IOU.
The lender threatens to "come round" over the debt. What do I do?
Threats and forcible collection are criminal offences regardless of whether the debt is genuine: record them and go to the police. The debt itself is handled through civil channels: the lawyer recalculates the interest and offers the creditor a written schedule for the lawful amount. Self-help weakens the creditor's position in court.
The debt is 5 years old. Can it still be claimed?
After 3 years from the due date the debtor has a limitation defence, which must be raised in court; the court does not apply it on its own. But if within those 5 years you paid part or acknowledged the debt in writing, the period restarted at that moment. That is exactly why the lawyer reviews the correspondence.
I am the guarantor and I paid. How do I recover from the borrower?
A recourse claim against the borrower for the full amount with interest and costs; the creditor's security (mortgage, pledge) passes to you. When paying, obtain a document from the creditor confirming you paid as guarantor and request the transfer of security; without it, recourse is an ordinary unsecured claim.
A loan in foreign currency - can I repay in lari?
A loan between individuals may be in foreign currency and is repaid in that currency or in lari at the rate on the day of payment, unless the contract says otherwise. For small loans from financial institutions a currency restriction applies. A change in the exchange rate is not by itself a ground for revising the contract.
Lawyers for Loan and Suretyship Cases
In a loan dispute the first job is arithmetic: lawful interest, limitation, set-off, and only then a lawsuit or negotiation. Within 15 minutes the coordinator connects you with a lawyer who knows loan agreements and National Bank regulation.
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Call: 568 330 318Being Asked to Pay a Debt, or Unable to Recover One?
In a free consultation the lawyer recalculates how much of the debt is actually lawful, which deadline applies and which route - negotiation, payment order or lawsuit - is right for you. The coordinator calls within 15 minutes.