Loan repayment with guarantor – is it worth it?
About taking loans together with a family member (eg a parent), he is usually talked about in the context of buying a flat. Many young borrowers take advantage of this solution because adding a person with higher income and a good credit history to the loan significantly increases the chances of a positive decision of the bank.
It is worth realizing that together with relatives or other relatives you can apply not only for a housing loan. It is also possible to take out cash or car loans together. People who decide on such a solution should definitely know all the consequences of co-borrower status. The experts of the Petruchio portal therefore decided to explain how jointly signing the loan agreement affects the obligations and liability of all debtors.
The bank may require installment from any co-borrower
Explaining the legal status of people taking out a loan together seems very difficult without first presenting the principles of the so-called joint and several liability under the Civil Code. This is also the responsibility towards the bank for persons jointly repaying the loan (irrespective of their personal ties).
Joint and several liability of debtors is a solution which is definitely very beneficial for the creditor (eg a bank). The principles of such liability were described in the Civil Code (CC). Pursuant to Article 366 paragraph 1 of the Civil Code, a creditor may demand payment of all or part of the benefit from all joint and several debtors jointly, from several of them or from each one separately. Until the total repayment of the debt to the creditor (eg a bank), all solidarity debtors are responsible for such an obligation. Debt settlement by one debtor releases the other debtors jointly and severally liable for the creditor. It is worth to realize that banks (like other creditors) usually direct claims to those co-borrowers (joint and several debtors) who promise the best chances for timely delivery. debt repayment.
By default, any liability regarding joint property (for example: a loan for a shared flat) is joint and several, unless otherwise agreed. In practice, quite often we are dealing with a situation in which one joint and several debtors (eg a parent) is not a co-owner of an apartment purchased with the help of a bank. For a bank creditor, this situation does not matter, because he has the option of demanding repayment of the debt also from a person who does not own the ownership of the purchased item. on credit.
A very important issue in the context of loans is also the possibility of pursuing claims by this joint and several debtor who fulfills the bank’s claim (eg Installment). If the legal relationship between joint and several debtors does not indicate otherwise, a person who regulates the obligation towards the lender alone may demand from the co-borrowers the reimbursement of the equivalent expenses. parts (example: two other co-borrowers must repay 1/3 of the installment paid). Such a claim for the return of a part of the debt settled towards the bank may constitute the basis for submitting a lawsuit. Of course, a much better solution is to settle the matter amicably.
Passing debt by one person can be a difficult task
As we have already mentioned, joint and several liability of debtors is a solution that seems to be beneficial from the point of view of every creditor (including the bank). The lender will rather reluctantly give up the privilege of having more and more joint and several debtors. Such a decrease in the number of co-borrowers may be related, for example, to the fact that, after increasing the income of the child, parents want to be “disconnected” from the housing loan.
In the described situation, however, the last word belongs to the creditor, ie the bank financing the item (eg apartment). The lender will definitely check whether the decrease in the number of co-borrowers will not result in an increase in financial risk. Such an analysis will also include a reassessment of the financial standing of the remaining debtor or other debtors (persons taking over the liability).
It must be taken into account that the bank may make the consent to “remove” a relative from the loan agreement subject to the establishment of additional collateral (eg a surety). A negative aspect of the change in the number of co-borrowers is also the need to sign an annex to the loan agreement. Depending on the bank, such an annex may cost eg USD 200 – USD 300. A negative aspect of the change in the number of co-borrowers is also the need to sign an annex to the loan agreement. Depending on the bank, such an annex may cost eg USD 200 – USD 300. A negative aspect of the change in the number of co-borrowers is also the need to sign an annex to the loan agreement. Depending on the bank, such an annex may cost eg USD 200 – USD 300.
The specific credit situation applies to ex-spouses
When referring to the topic of joint repayment of a loan, it is worth mentioning one more issue. It is about the responsibility of former spouses for a housing loan that was contracted together. Contrary to what some people may think, divorce does not affect the spouses’ obligations to the bank in any way. They will remain co-borrowers jointly and severally liable even after the divorce and division of the apartment.
Unfortunately, it may happen that the joint and several liability for the installment will still be borne by a person who has nothing to do with the loaned flat (eg as a result of the payment of her claims regarding housing by her ex-wife). This situation is undoubtedly stalemate. The problem can be solved when one of the ex-spouses agrees to a complete debt transfer and independent repayment of installments.