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Chasing a guarantor for an unpaid debt

Last modified: November 22, 2023

Chasing a guarantor for an unpaid debt Frontline Collections

Chasing a Guarantor for unpaid monies

There are many instances where chasing a guarantor for unpaid monies can develop. Debt Collection from Guarantors can be a challenging objective but a rewarding one. Guarantors come in all shapes and sizes and normally offer some form of financial security to the lender or provider.

This article will explore what the expression chasing a guarantor means and the different types of guarantor also.

What is a Guarantor?

A guarantor is usually somebody that acts as a financial guarantee. This can be for a loan, mortgage or rent. A guarantor effectively promises to pay the debt if the person they are acting as a guarantor for does not fulfil their financial obligations.

Somebody will only act as a guarantor for somebody they know very well such as a close friend or a family member. It is very common for Property landlords to require a rent guarantor for student tenants.

To be a guarantor, you will need to be over 21 years old with a decent credit history. It is very often likely they are a homeowner also and can cover any unpaid debts in the event of a default.

Why would somebody need a guarantor?

The most likely reason for somebody needing a guarantor are based on the following factors below:

  • Not much credit history such as a young person or student
  • Has a low paid job
  • Negative credit score
  • Has previously defaulted on agreements

An example of this is the student lettings sector. Many student landlords require rent guarantors to act as security in case the students do not pay their rent. Very often the rent guarantor is the parents of the student.

Can somebody stop being a guarantor?

The likelihood is that the person that has signed as a guarantor for the rent or loan will remain in place for the whole duration of the agreement. This also means they will be liable for any defaults or debts that arise from such. In the case of being a guarantor on a mortgage, this is more flexible. Very often, the mortgage provider will allow somebody to be removed as the guarantor once there is enough equity within the property.

Can somebody be a guarantor with bad credit?

A guarantor with a bad credit history themselves is unlikely to be considered. There is the possibility that they may be chased for unpaid debts that arise so if they have a low credit score, it is unlikely they can be considered as a safe guarantor.

Can a guarantor be chased for unpaid rent arrears?

Yes. The guarantor has agreed to pay the rent in the event the tenant does not. There is a standard legal requirement for a guarantee agreement to be in writing, clearly setting out the guarantors obligations in the event of unpaid rent arrears. It is also very common for the guarantee agreement to extend to other tenancy conditions such as damage caused to the property and the repair fees therein etc

Even if it is a joint tenancy agreement, the guarantor will be liable for all parties rent, whatever the arrangement between the tenants themselves.

The guarantor’s liability normally only ends once the fixed tenancy has expired.  Landlords chasing a rent guarantor for unpaid rent arrears is a lot more common than you may think.

How do Guarantor personal loans work?

A guarantor personal loan works pretty much the same as a normal loan. In the case of the guarantor, they agree to pay any debts incurred during the life of the loan. The financial provider will credit check the guarantor to assess their suitability to be the guarantor.

This can carry huge risk to the guarantor as they will be liable for an personal loan debt incurred plus have their own credit score damaged if the borrower defaults. Anybody considering being a guarantor should be very aware of the personal risk involved and that they may be liable to personal debt collection action.

Debt Collection from the Guarantor

A guarantor only becomes liable for a debt in the event of a default on the original agreement. This is the case in both tenant rent arrears and personal loans etc Assuming the correct agreements have been signed, then the guarantor is liable for the full debt as per the conditions laid out in the agreement.

They are therefore liable for all sums involved and can be subject to professional debt collection measures and legal action if necessary therein. Chasing a guarantor for fees owed can be a straight forward exercise.

 Need to chase a guarantor for an unpaid debt?

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