Debts could impair not just your mental health but the quality of your life as well. Moreover, financial instability could impair you from making your trust deed payments on time. This could potentially be risky as your debtors could take legal action against you.
However, you would be relieved to know that a guarantor could help pay off your debts.
I have compiled this complete guide that will help you understand how your guarantors can assist in paying off your unwanted debt.
What is a trust deed guarantor?
This is a promise made though a guarantee in a trust deed.
This means if the borrower is unable to make the payments, the guarantor accepts the responsibility to pay off the remaining amount.
Who is a guarantor?
A guarantor is someone who agrees to pay off your rent or loan amount. This is in case you do not pay or are unable to pay in the future.
Your close friend or family member could be your guarantor.
Can I have more than one guarantor?
You could have more than one guarantor. This means you have more than one person responsible who will help you pay off your trust deeds.
In case of financial instability, your guarantors can collectively help pay off your unsecured debts through your trust deed agreement.
If you are unable to pay in the future, your creditor could still receive payments. This will prevent you from falling into bankruptcy.
What does a guarantor loan refer to?
In case your credit rating is low, you could get a guarantor loan. A huge amount of loan through this.
However, the amount of interest that is charged is significantly high. Which means it is risky for the lender. To ensure security of the lendor, a guarantor is assigned.
This could be your family or close friend.
Can I enter a trust deed if I already have a guarantor?
Your unsecured guarantor loan is treated the same way as your unsecured debts.
The creditors can choose if they accept the trust deed. After an agreement is made, your creditor will receive a dividend from the trust deed. The liability will end after you receive your letter of discharge.
Will a trust deed affect my guarantor?
Your guarantor could be affected through your trust deeds.
Since your guarantors get no protection, your creditor could ask them to make payments if you are unable to.
In case you have taken an unsecured loan, and you have not made the payments, your guarantor’s house could be at risk.
How do I get relieved as a guarantor for a trust deed?
Becoming a guarantor could be difficult. However, if you no longer want to be one, there are a number of things you could do.
- Ask the bank to relieve you:
If your partner has taken out more loan without your permission, you could ask the bank to relieve you. However, you will still have to pay the original outstanding amount.
- Request the borrower to pay back:
You could ask the borrower to pay you back. Try explaining why you can not proceed as a guarantor.
- Find a substitute:
You will have to convince the bank that you have a valid reason for opting out. If you find a suitable substitute you could be set free.
- Legal action:
You could take legal action in case of a default. However, this could be risky.
What if my guarantors refuse to pay?
Your guarantors are signed through legal agreements. If they refuse to pay, you could take legal action against them.
A court warning could be sent asking them to make the payment.
Can I add my guarantor loans in my trust deed?
This is considered as a type of unsecured debt. Hence, it could be included in your trust deed.
However, it is important to understand that your guarantors will expect full liability of the loan.
Frequently Asked Questions (FAQs)
Can I apply for a debt solution for my guarantor loans?
A debt solution in Scotland could help clear off your debts. These can help pay off your guarantor loan as well.
What happens if I am a guarantor?
You will be legally obliged to help pay off your partner’s debts. In case they are unable to make the payments, you will be held accountable for the payments. Your creditors could force you into making the payments.
How do I contact a guarantor for my trust deed?
You could ask your friend or family member to sign a guarantor for you. This will help you keep you maintain close relationships in case you can not afford to pay off the debt amount.
To conclude
It is important to understand, there could be risks involved for the guarantor. However, if the payments are made on time and rules are not broken, you could get out of a trust deed successfully.
Your guarantors could help pay off your loans early, without you having to deal with legal issues.
I have summarized all the necessary details you could need in this article. Read the instructions provided carefully before finding yourself guarantors.
For more legal advice, contact your trustee or feel free to reach out to us.