Options for a Guarantor - following repayment of loan

[kettlaness]

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.

[jaguarsuk]

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.

[des8]

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

[Amethyst]

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 )

[kettlaness]

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.

[kettlaness]

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.

[des8]

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

[Amethyst]

Perfect Des.

[ScottishSolicitor]

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.

[Badger99]

It is the case that t

he cautioner ("guarantor") who pays the debt in full is entitled to as assignation from the creditor so as to enforce his right of relief against the principal debtor.

Where these things get complicated is if the loan small print states that choice of law is England and Wales. I am a Scottish-qualified lawyer but the textbook I have referred to suggests there is a similar right in E&W under the Mercantile Law Amendment Act 1856.

5. A surety who discharges the liability to be entitled to assignment of all securities held by the creditor.

Every person who, being surety for the debt or duty of another, or being liable with another for any debt or duty, shall pay such debt or perform such duty, shall be entitled to have assigned to him, or to a trustee for him, every judgment, specialty, or other security which shall be held by the creditor in respect of such debt or duty, whether such judgment, specialty, or other security shall or shall not be deemed at law to have been satisfied by the payment of the debt or performance of the duty, and such person shall be entitled to stand in the place of the creditor, and to use all the remedies, and, if need be, and upon a proper indemnity, to use the name of the creditor, in any action or other proceeding, at law or in equity, in order to obtain from the principal debtor, or any co-surety, co-contractor, or co-debtor, as the case may be, indemnification for the advances made and loss sustained by the person who shall have so paid such debt or performed such duty, and such payment or performance so made by such surety shall not be pleadable in bar of any such action or other proceeding by him:

Provided always, that no co-surety, co-contractor, or co-debtor shall be entitled to recover from any other co-surety, co-contractor, or co-debtor, by the means aforesaid, more than the just proportion to which, as between those parties themselves, such last-mentioned person shall be justly liable.

[kettlaness]

t is the case that t

he cautioner ("guarantor") who pays the debt in full is entitled to as assignation from the creditor so as to enforce his right of relief against the principal debtor.

Where these things get complicated is if the loan small print states that choice of law is England and Wales. I am a Scottish-qualified lawyer but the textbook I have referred to suggests there is a similar right in E&W under the Mercantile Law Amendment Act 1856.

5. A surety who discharges the liability to be entitled to assignment of all securities held by the creditor.

Every person who, being surety for the debt or duty of another, or being liable with another for any debt or duty, shall pay such debt or perform such duty, shall be entitled to have assigned to him, or to a trustee for him, every judgment, specialty, or other security which shall be held by the creditor in respect of such debt or duty, whether such judgment, specialty, or other security shall or shall not be deemed at law to have been satisfied by the payment of the debt or performance of the duty, and such person shall be entitled to stand in the place of the creditor, and to use all the remedies, and, if need be, and upon a proper indemnity, to use the name of the creditor, in any action or other proceeding, at law or in equity, in order to obtain from the principal debtor, or any co-surety, co-contractor, or co-debtor, as the case may be, indemnification for the advances made and loss sustained by the person who shall have so paid such debt or performed such duty, and such payment or performance so made by such surety shall not be pleadable in bar of any such action or other proceeding by him:

Provided always, that no co-surety, co-contractor, or co-debtor shall be entitled to recover from any other co-surety, co-contractor, or co-debtor, by the means aforesaid, more than the just proportion to which, as between those parties themselves, such last-mentioned person shall be justly liable.

Thank you for all this ^^^ information . . . we've decided, that we will pay off my stepson's obligation in full, in the next few days . . . "ouch !".

For anyone who might read this posting, please never consider being a guarantor for a loan.

Most importantly, our stepson must learn from this lesson - his 'friend' has come out of this issue with £4,000 and no stain to his reputation or credit history . . . we've been told, that he's now moved to Wales - probably looking for other gullible folk.

Is there really nothing that we can do, to get some degree of satisfaction against the scumbag ?

[jaguarsuk]

Thank you for all this ^^^ information . . . we've decided, that we will pay off my stepson's obligation in full, in the next few days . . . "ouch !".

For anyone who might read this posting, please never consider being a guarantor for a loan.

Most importantly, our stepson must learn from this lesson - his 'friend' has come out of this issue with £4,000 and no stain to his reputation or credit history . . . we've been told, that he's now moved to Wales - probably looking for other gullible folk.

Is there really nothing that we can do, to get some degree of satisfaction against the scumbag ?

I think you could consider complaining to the Financial Conduct Authority about Amigo as they clearly did not do enough checks on your son as a guarantor.

Regards the "friend" unless he coerced your son into it or forced him under duress to be a guarantor there's nothing you can do.

[Debt Camel]

This is an old thread but I will make a couple of comments in case it is read by anyone in the future.

1) in England a guarantor could sue the borrower claiming "unjust enrichment". I have no idea if there is a Scottish equivalent of this. Of course often the borrower has no money so this would be a pointless exercise...

2) the guarantor here may have a good "affordability" complaint to Amigo, going to the Ombudsman, if this was rejected. The argument being that Amigo should have verified his income and expenses before deciding he could afford the loan repayments. The house is irrelevant to this test, he has to be able to afford them on a sustained basis out of his income.

Since May this year a VERY large number of these complaints at FOS are being won, well over three quarters...

If no complaint to FOS was made at the time, this can still be done now. See https://debtcamel.co.uk/amigo-complaints-by-guarantor/ for a template letter.

The guarantor should ask for a refund of all amounts he paid to the debt, plus 8% statutory interest and for the judgment to be removed. If the poster had decided to settle the loan on her son's behalf, this would be a refund of the full settlement amount plus any previous payments made.

If there was a complaint to Amigo last year which was not taken to FOS, it can still be taken now. There is usually a 6 months time limit, but Amigo used to habitually waive this - the Final Response letter rejecting his complaint would have said that he could take it to the Ombudsman at any time.

This is worth doing even if Amigo had won their court case.... see https://debtcamel.co.uk/amigo-ccj-can-still-complain/ which looks at a CCJ but no doubt the same would apply in Scotland.