can i change my guarantor status?

Question

I became guarantor for a long time family friend's house 2 months ago because he left his wife and she stole the books for his business, so he could not prove his income.
Q1, in 1 month's time will he have enough new books to register himself as sole guarantor?
Q2, if this all go's wrong, is it possible for me to remove myself as guarantor?

english law please, thanks.

i mean UK law

to reiterate i am guarantor because my friend cannot self certificate for his rental property, without the books to his business

Answer 1

I think this is more of a commercial question than a legal one. I expect that the only two ways to remove yourself as guarantor are

(1) For the debt to be repaid, so that any further borrowing is effectively a new loan, with entirely separate guarantees - but you would have to check the terms of whatever you signed to see at what point you get out of it

(2) For the lender to accept, as a commercial proposition, a change in guarantor. They will only do that if the alternative guarantor is as good as or better than you in terms of creditworthyness.

If you raise this with the lender without lining up that alternative and better guarantor, and without a good story as to why there's to be a change, they could assume the business is going bad and call in the loan. That's a worst case scenario, but I would say that panic tends to spread, so don't start it.

One possible story to explain why you want out of guarantor status is that you want to (e.g.) start your own business, borrow to build an extension on your own house, whatever, and that means you need to free up your status as a provider of loan guarantees so that you can use that for your own purposes. Saying "I want out because the business looks ropey after the MD's wife tried to hijack it" will be a mistake. After all, you are there for precisely that contingency!

Like someone said, you are doing your friend a HUGE favour here. This is a big deal. Good luck!

PS If you are a guarantor, then there is debt in the business, otherwise what's a guarantor for? He could look to refinance the debt. If the business is doing well, he could consider invoice financing, preferably the invisible sort, so that the borrowing is secured on his debtor book. But he will need to reconstitute his books for that, and he will need several months of data to prove the income.

Or if he has assets (especially ones on wheels - forklifts? tractors? or ones that can easily be cashed in - stock held? warehouses full of coffee?) he could consider some version of asset refinancing, so that the borrowing is secured on the assets. For that all he needs is his asset register and an up to date balance sheet (one month is fine). Either way would allow the loan that you are securing to be repaid, thus letting you out.

Answer 2

I am not sure ..but i think there is a way you can resign from being a guarantor ..if you think there is a foul play ..or you are not happy with the people you standing guarantor to ..or if the situation has changed ..clearly in this case it has changed ..because of those changes you can resign from being a guarantor ..a solicitor will be the person to inquire

Answer 3

1) It is unlikely that a lender will accept 3 months' books as enough, but you might be lucky.

2) Your guarantee probably states that you will remain liable until all debts are cleared. The lender can release you from your guarantee, but it is at their sole discretion.

you are being a very good friend to this person - I hope he appreciates it!!

Answer 4

As guarantor you are financially liable for him so you might need a lawyer to get out of it.

Answer 5

Dear Sparky,

Do you mean UK law, or American English?

-j.