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Options for a Guarantor - following repayment of loan

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  • Options for a Guarantor - following repayment of loan

    Hi All,

    It is not without considerable dismay, that I write this message.

    My stepson is at University in Scotland and doing rather well on his degree - thank goodness !.

    Last September (at a time when he was in UNI) a letter arrived at our home in Shropshire - addressed to him. The envelope had 'Amigo Loans' on it, so out of concern, we opened it. The letter thanked him for being a guarantor, for a loan that a 'friend' of his had taken out for 4,000 - to be repaid at 200 per month, over 3 years. His 'friend' is not a student, but someone that he met in Edinburgh - which is where the 'friend' lives and works.

    We immediately contacted Amigo and told them that our son did not own a house, did not have a job or income and is a full-time student. Unfortunately, Amigo would not discuss the matter with us - understandable, as the loan did not directly relate to us. We found the loan had gone to our son as guarantor and that he'd promptly transferred the money to his 'friends' account - with no regard to any possible consequences.

    You might imagine how angry we were, when our son told us that he had lied to Amigo - telling them that he had a full-time job and worst of all, that he owned our house. Amigo checked to find that he is a resident at this address, and took as fact, his statement (made over the telephone) that he owned our property. I'm amazed, that the checks weren't much more thorough, but it would appear that they carried out the (minimum) requirements. He had worked (very recently prior to the loan) in the Summer (part-time) at a local supermarket, which suggested that he was in regular employment and that he would be able to make the statutory minimum repayments - if required.

    Of course, his friend made the first payment, but has defaulted on the rest. We sent a letter - a kind of 'plea for help', to the 'friend's' parents, to see if they might intercede, following which, they made two monthly payments - but these then stopped. Our son has made two payments, but no further payments have been made since March. Accordingly, Amigo have sent letters threatening legal action and with regard to this, I'm sure that they'd win, especially as our son was such a feckwit to lie to get the loan.

    Of course, we've ranted and raged at our son, but this is pretty futile and does nothing constructive to address the situation - ultimately, he is liable as guarantor, for the full amount owed.

    We appear to have two choices - either my son defaults his responsibility as guarantor and almost certainly has a CCJ against his name, or the loan is repaid.

    I've thought long and hard about the situation; we really don't want the lad to have a CCJ against him - that could really jeopardise his prospects of getting a job and home in the future.

    In my opinion (and I'm willing to take advice on this), it would be better to pay off the debt in full - asap. The problem being, that the loan is (and will continue) to accrue interest at an extortionate rate - currently, it would cost about 4,000 to pay off the loan - the loan amount is what it was originally, as payments have been missed. If it were paid off over the next three years (or longer), the total of the repayments would be significantly higher than the 4,000 that might be paid now - especially as quite a few payments have been missed.

    Although it would be very 'painful' to pay off the lot in full, it would clear the debt and hopefully, we (and our son) would be able to put the matter behind us - better than paying off the loan on a monthly basis for the next few years.

    Now we are getting to the part where I'd really appreciate your help - if our son pays off the loan (with family help), that will be the matter 'done & dusted'. It rather 'narks' me, that his 'friend' will get off, having made only one payment - and his credit history will be unaffected. Is there any form of action that we could take against the smug little b@st@rd ?

    It'll have to be some form of legal action .

    Is there a Scottish system which equates to MoneyClaim, by which our son be able to make some claim against his friend ? This may sound vindictive to some and it probably is, but I'd happily spend a few hundred quid if we could get a CCJ against the friend. Yes, I'm feeling embittered and I'd really like to inflict some similar pain on the 'friend' - a merciful beheading sounds tempting , but whatever you might suggest must be legal and above board.

    'Thank you !' for any suggestions made.
    Tags: None

  • #2
    I don't know that you would have a cause of action as the friend has entered into no contract with your son, his contract is with Amigo.

    We're a bit short on Scottish advice, but ScottishSolicitor may be able to elaborate.
    My posts on this forum are offered based on my experience dealing with a variety of life events. I have no formal legal training and if in doubt take professional legal advice or contact the CAB. If you follow anything I write on this forum you do so at your own risk and I accept no liability for any loss, costs or other out comes.

    I do not come on here in the evening, at weekends or on public holidays.

    Comment


    • #3
      Hi and welcome

      Well if nothing else your son has learnt a valuable life lesson, even if painfully.

      There is a Scottish equivalent of county court claims (https://www.mygov.scot/court-claim-money/)
      and tagging ScottishSolicitor who will probably be of more help

      crossed with jag

      Comment


      • #4
        Well, he is a pickle isn't he ! AMIGO cause nothing but problems between friends and families IMO and I believe they are being looked into by regulators and the press atm regarding them allowing these kinds of situations to arise.

        I guess what you do next depends what you want to happen with your son ( learn his lesson etc ) but being a student, having fraud markers against him, probably a CIFAS marker on his credit file etc will be affecting him financially for the next six years. No idea what his degree is in but if he is looking into going into banking/finance/law etc etc it could affect his career choices, as well as any form of credit, being able to rent somewhere to live, changing bank accounts etc etc

        If you just quietly get it paid off ( if you are in a position you can do that) and ensure he pays you back then it shouldn't affect him long term. So it's weighing that up against wanting to make the ''friend'' pay and AMIGO to be forced to act properly in these kind of guarantor applications ( will have to check exactly what rests on their shoulders ( like should they check land registry re ownership of the property) and what falls solely down to your son lying in the application ) vs trying to protect your son a bit from any fall out affect on his future. ( Yes he deserves a slap for being such a doofus in letting this ''friend'' do this to him and for lying to AMIGO but not sure that mistake should bugger his future up )

        I'll try look into guarantors recouping payments off the actual debtor too. See what case law might be about.

        Have a read about regarding CIFAS markers ( their site isn't a great help - best to have a look at posts across forums where people have been trying to get rid of them to see the impact they can have )
        Common Sense .... if in doubt, use it !

        “We may not win by protesting, but if we don’t protest we will lose. If we stand up to them, there is always a chance we will win.” Hetty Bower

        Any support I provide is offered without liability, if you are unsure please seek professional legal guidance.

        If we have helped you we'd appreciate it if you can leave a review on our Trust Pilot page

        Find Solicitors offering fixed fees on our sister site - JustBeagle.com

        Comment


        • #5
          Originally posted by jaguarsuk View Post

          I don't know that you would have a cause of action as the friend has entered into no contract with your son, his contract is with Amigo.
          Indeed, but the friend assured our son, that he (the friend) would make regular re-payments and that our son would not have to do so.

          Comment


          • #6
            Originally posted by des8 View Post
            Hi and welcome

            Well if nothing else your son has learnt a valuable life lesson, even if painfully.
            A very good point and realistically, this is the best way to consider the situation.

            If he makes no further blunders in life, I'll be perfectly happy. I know of young folk who have injured themselves (and others) with more serious issues, involving cars or drugs etc., etc.. Annoying as it is, at least no-one has suffered any harm.

            Comment


            • #7
              In looking through a long dissertation on suretyship (http://aei.pitt.edu/40735/1/Approxim...slation.28.pdf) I found this statement:which confirms my original unexpressed thoughts
              " under the common law of Scotland a cautioner (surety) who pays the debt is entitled to the assignation (assignment) of all the creditor's rights and securities against the debtor."

              Hopefully ScottishSolicitor can guide you through the complexities of Scottish procedures

              Comment


              • #8
                Perfect Des.
                Common Sense .... if in doubt, use it !

                “We may not win by protesting, but if we don’t protest we will lose. If we stand up to them, there is always a chance we will win.” Hetty Bower

                Any support I provide is offered without liability, if you are unsure please seek professional legal guidance.

                If we have helped you we'd appreciate it if you can leave a review on our Trust Pilot page

                Find Solicitors offering fixed fees on our sister site - JustBeagle.com

                Comment


                • #9
                  Originally posted by des8 View Post
                  In looking through a long dissertation on suretyship (http://aei.pitt.edu/40735/1/Approxim...slation.28.pdf) I found this statement:which confirms my original unexpressed thoughts
                  " under the common law of Scotland a cautioner (surety) who pays the debt is entitled to the assignation (assignment) of all the creditor's rights and securities against the debtor."

                  Hopefully ScottishSolicitor can guide you through the complexities of Scottish procedures
                  This is an interesting one. I must say good research so far. I would need to consult a specialist textbook if you wanted a detailed appraisal but I suspect that there will be a way to engineer come back against the principal debtor. Whether this would be cost effective using a solicitor would be the issue I think. Feel free to send me a private message if you were interested in taking this further.

                  Comment

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