You would be liable as guarantor of loan for repayment of debt
Liability as loan guarantor on Promissory Note
My relative has availed a private loan from his colleague by cash. He signed on a Promissory Note. I stood as his loan guarantor and also signed on the Promissory Note. If my relative defaults on repaying the loan, am I liable to pay his loan?
Asked 2 years ago in Civil Law
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11 Answers
1. If the loan can't be recovered from your relative, after following all the procedures, such as salary attachment, etc., or if the borrower dies without clearing the outstanding loan, then the loan amount may be recovered from you since you have stood as Surety.
2. However, you can meet the borrower and impress upon him and pressurise him to repay the loan, to avoid further complications.
The guarantor would become liable to repay the loan if the borrower fails to repay the same.
Dear client, in case the primary borrower defaults on loan repayment, the liability to pay the outstanding amount falls on the loan guarantor. In case of non-payment, a guarantor is liable to legal action.
Yes, since you have stood as the guarantor to secure the loan availed by your friend.
As of now there is no issue but is there any way I can protect myself if something goes wrong and the burden of repayment falls on me. The Promissory Note was issued more than 3 yrs ago but the date is not mentioned on the Promissory Note. To the best of my knowledge the lender is not a licenced Money lender and has lent 5 lakhs by cash as part of this loan. If the lender files a civil recovery suit will the burden of proof of transaction fall on the lender or borrower as this was a cash transaction.
Asked 2 years ago
Lender has to prove that Rs 5 lakhs was paid to borrower. the fact that promissory note has been signed by borrower proves that money was give to borrower
you need money lender license to advance money as loan
1. You have agreed to sign as a guarantor to the loan provided to your friend willing to pay for the outstanding loan amount in case the borrower fails to repay the outstanding loan amount. Legally you shall have to cpmply with the agreement you have entered in to with the lender.
2. You now shall have to find out loopholes in the transaction to escape payment of the outstanding loan amount as guarantor.
3. The lender can not lend so much money claiming interest at a rate more than prescribed by RBI. The burden of proof lies with the lender.
The proof of transaction will fall on the lender.
However if the signature of the borrower on the promissory note is admitted then the liability on the borrower stands proved.
Dear client, You can approach the bank directly with a letter stating that you wish to withdraw as a a guarantor. Now, the tricky question is whether the bank will allow you to relinquish your responsibilities. Remember, that you have signed the form and now the onus is on the bank to decide.
If the loan is large and there is a large outstanding amount, chances are bright that the bank may not oblige. However, if the bulk of the amount has been paid without any defaults in the past, the bank might let you go.
Yes, you are equally liable as the co-borrower as you have countersigned the promissory note. The money lender may insert a suitable date so as to save limitation.
yes being guarantor you will be liable.
