A surety is one of the most common ways of securing the performance of obligations when it comes to loan agreements or bank loans. And if the debtor, for some reason, cannot fulfill his obligations on time, the responsibility falls on the guarantor.
Instructions
Step 1
First, be clear about what a surety is. This method of ensuring the fulfillment of the terms of the contract implies that the guarantor assumes joint and several liability to the creditor for the debtor's failure to fulfill his obligations.
Step 2
For the surety, joint and several liability consists in the fact that the creditor can choose to whom to present his claims: to the debtor or the surety. As a rule, monetary obligations are secured by a surety, taking into account the interest and penalties accrued on them. However, within the framework of a pledge or mortgage relationship, the surety can provide his property as security.
Step 3
Enter into a written surety agreement. It can be either two - or tripartite (with the participation of the debtor). Specify in the contract such essential conditions as the deadline for the fulfillment of the main obligation and the amount of debt secured by the surety. In addition, the contract must also define the time frame for the surety.
Step 4
If the debtor has not fulfilled his obligations within the allotted time, file a claim against him or the surety at your option. Simultaneous filing of claims against both the debtor and his surety is also allowed.
Step 5
When the surety is the first to perform the obligation, he has the right to receive from the debtor the amount paid by way of recourse. In this case, the surety becomes a creditor for the debtor. If the obligation is performed earlier by the debtor, he is obliged to immediately notify the surety. A situation may arise when the obligation will be fulfilled by both the debtor and the surety. Then, the surety has the right to recover the corresponding amount from both the debtor and the creditor.
Step 6
Remember about the grounds upon the occurrence of which the surety is terminated early. Firstly, these are changes in the main obligation that occurred without the consent of the guarantor, due to which the volume of his responsibility increases. For example, the bank increased the interest on the loan agreement without agreement with the guarantor. Secondly, the transfer of debt under the main obligation was completed without the approval of the guarantor. This includes cases when the debtor's obligations have passed to his heirs.
