skumar (abc) 07 December 2015

Relative not paying loan, i am guarrantor in bank?

Dear Friends, I am not very much familiar with property related laws. Two years ago my relative has taken loan of Rs.9 lacs from bank for purpose of buying a flat. I have given a Guarranty on his behalf in the bank. Now I came to know that he is not repaying the full installments and is only paying half amount of the fixed installment and I doubt that he may stop paying that also. Although bank has also kept is flat related documents like Registry etc. I consulted that bank manager, he told me that you bring us another Guarrantor then we will remove your name as guarrantor. Now my question is : In case my relative pays less amount of installment or stops paying the installment then is it going to effect me also. What should I do to save myself if tommorow bank gives me any notice bing a guarrantor? What is the way out?

regards

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3 Replies

Kumar Doab (FIN) 07 December 2015

You may go thru the loan agreement carefully. BM/bank is liable to supply an authenticated copy to you without any cost.

The guarantor is jointly or severally responsible to pay the debt. You can write to bank withdrawing your gurantee.

If borrower and gurantor do not pay, bank shall auction the property.

If you end up paying you can sue the borrower.

siddhartha sinha 07 December 2015

What does the guarantee agreement mention about amount, time limit, when can you be asked to pay.When was guarantee given by you, before disbursement or afterwards? Dear author, there is no definite legal way out as a matter of fact. Wordings of the agreement only may help if at all.Once borrower is in default bank may ask you to pay the outstanding amount or go for any other mode of recovery its their discretion. You may still try to request your relative to be regular with payments and if you want you may send a notice to bank for cancellation of guarantee. Its not the regular practice but you can try.