It will depend on the circumstance that who is filing for bankruptcy. Such as:
- Who is filing for bankruptcy
- The person who does not file bankruptcy still owes all or his debts
The liability of guarantor takes place when the borrower does not pay the loan. The lender must pursue the borrower in first instance. If the borrower fails to do so; then the lender may ask the guarantor to fulfil his obligation. Personal guaranteeis an important document because it gives the assurance to the lender that guarantor will repay the amount if the borrower does not fulfil his terms. Guarantor liability can be discharged on the filing of the petition for bankruptcy.
What will be happened when the borrower file for bankruptcy, and you have not filed for bankruptcy
If the borrower has filed the bankruptcy; then the borrower liabilities will be discharged and you will be liable to fulfil your obligation. Bankruptcy always discharges the liabilities of the filing person and does not discharge liabilities of other person. As a guarantor you will be responsible to repay the loan amount if the debtor got the bankruptcy protection.
If you have got the bankruptcy protection then the lender cannot pursue you for the repayment of the remaining debt amount. The bankruptcy releases you from the debts, existed at the date of bankruptcy.
What is the law about personal guarantee?
The personal guarantee contract must be in written form and it must be signed by the guarantor. Before entering into the personal guarantee contract, the guarantor must consider the following important points. Such s:
- Nature of guarantee;
- What is maxim amount I am guaranteeing?
- Financial position of the debtor
- Is the guarantee for a specific or unlimited sum?
In the case Linda Jane Inkster v Mountain Wear 2004 Limited High Court held thatguarantor must take legal advice before signing the agreement.
Why to buy the personal guarantee form from Net Lawman
Net Lawman NZ provides best quality online legal documents, legal contracts and legal agreements for use in New Zealand. Net Lawman is the premier source to buy online legal documents in New Zealand. Mature your legal agreements and legal contracts without any extra help. Our legal templates are self explanatory, written in plain English and easy to use. Just download from our website and use them according to your needs. This guarantee of contract debt comes with a no questions asked full money back guarantee. Comprehensive guidance notes, written by the author of the document, are included. These notes ensure that you don’t need to be a lawyer or have knowledge of the law to understand which paragraphs you should edit to complete the agreement.
Agreement features and contents
The key benefit of using this document over adding a guarantee paragraph to the original contract is the simplicity of use. There is no need to edit and agree the original. That means less room for making a mistake and invalidating the original.
- Can join one or more guarantors
- Guarantee for all aspects of the original contract
- Option to limit the guarantee if necessary
- Guarantor can be a business or individual
- Suitable for any type of contract
- Can be executed as a deed or a contract
The guarantee of contract performance agreement includes the following paragraphs:
- The guarantee
- Changed terms of the original contract
- Guarantor's continued liability
- Rights waived
- Guarantor's indemnity for costs
- Assignment of guarantee
- Miscellaneous matters
Net Lawman offers comprehensive personal guarantee form. Such as:Guarantee: loan or debt by third party
This is a supplementary contract that brings in a guarantor to a situation where the client of a provider of a service or supplier of goods has failed or is likely to fail to make payment when due. It can be used with any performance contract and can add a personal guarantee for an individual, or bring in another party, such as a business. The key benefit of this document is that the original contract remains unchanged, making this a neat solution to adding a guarantor.