What happens if I am a Guarantor (and they stop paying)?
Being a guarantor is not just a character reference. It is a terrifying legal commitment where you become 100% liable for someone else's debt. If the borrower misses a payment, the lender can (and will) pursue you for the full amount immediately.
1 The Typical Timeline
If you take no action, this is the standard statutory process. Timescales are approximate but typical for 2026.
Borrower Misses Payment
The lender may not tell you immediately (though they should).
Formal Demand
You receive a letter demanding the arrears or the FULL balance. Do not ignore this.
CCJ Application
If you don't pay, they apply for a CCJ against YOU. This ruins your credit for 6 years.
Bailiffs / Charging Order
They can send bailiffs to your home or secure the debt against your house.
2 Free Calculators & Checks
Guarantor Liability Scanner: Check if your guarantee contract might be unenforceable due to common lender mistakes.
Guarantor Liability Scanner
If the contract changed without you signing a NEW guarantee, the old one might be void.
Likely Enforceable
Based on your inputs, the guarantee appears to have been set up correctly. You are likely liable.
Guarantor Hardship Letter: Draft a legal letter arguing you cannot afford to pay the lump sum.
Hardship Defense Builder
Preview
[Your Name] [Your Address] [Date] To [Creditor Name], Re: Guarantor Demand - Account No: [Account No] I acknowledge receipt of your demand for £5000 regarding the debt of [Debtor Name]. While I do not accept liability for the reasons outlined separately, even if liability were established, I simply cannot pay this lump sum. My financial situation is as follows: - Monthly Income: £1800 - Essential Living Costs: £1200 - Disposable Income: £600 Demanding payment in full would cause me "Undue Financial Hardship". Under the FCA's consumer duty guidelines (and/or Good Practice for debt collection), you must accept a realistic repayment plan based on affordability. I offer to pay £50 per month as a gesture of goodwill, without prejudice to my right to dispute the liability itself. Please confirm acceptance of this offer and freeze any further interest or charges. Yours sincerely, [Your Name]
The Danger: Indemnity vs Guarantee
Check your contract wording carefully.
- Guarantee: You only pay if the borrower cannot pay. The lender must pursue them first.
- Indemnity (Most Common): You are a 'primary obligor'. The lender can ignore the borrower and come straight to you for the money the moment a payment is late. Most professional lender contracts are Indemnities.
Can I get out of it?
It is difficult, but contracts can be challenged if:
- Undue Influence: Were you pressured or bullied into signing? (e.g., by a partner).
- No Independent Legal Advice: Did the lender fail to tell you to seek a solicitor? (Crucial for large loans).
- Variation of Terms: Did the lender increase the credit limit without asking you? This may void the guarantee.
- Misrepresentation: Did the lender lie about the borrower's creditworthiness?
Summary of Options
Propose a Payment Plan
If the debt is valid, treat it as your own. Offer a 'Pro Rata' payment based on YOUR disposable income, not the full amount.
Request the CFA Assessment
Ask the lender for the proof of 'Creditworthiness and Affordability' check they did on YOU when you signed.
Contact the Borrower
Can they refinance? Can they sell the asset? Pressure them to take responsibility.
Common Questions
Can I withdraw as a guarantor?
Usually no. You are locked in until the debt is paid. Some agreements have a varying 'break clause', but this is rare.
Does this affect my credit score?
Just being a guarantor involves a 'hard search' on your file. If the borrower pays on time, it's fine. If the lender issues a Default or CCJ against you, your score will be trashed.
What if I have no money?
You cannot pay what you don't have. You can offer a token payment (e.g., £1/month). However, they can still get a CCJ to secure the debt against your future assets or home.
I didn't read the contract!
This is not a defense. Courts assume you read what you signed.
The borrower has an IVA. Do I still pay?
Yes. An IVA writes off strictly the borrower's liability, not yours. You are still on the hook for the full remaining balance.
Official Sources & References
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