Guarantors and co-debtors in debt adjustment

When you take out a joint loan with someone or guarantee someone else’s loan, you are responsible for repaying the debt in accordance with the commitment you have made.

If the principal debtor cannot repay their debt and is granted a debt adjustment, a guarantor may have to repay the share of the debt that the principal debtor is unable to repay. In some cases, the guarantor must repay the entire outstanding debt amount. The creditor also has the right to recover the debt from any securities provided. The guarantor does not have the right to recover the debt later.

The guarantor can negotiate new repayment terms with the creditor as a solution to the situation. If the guarantor cannot repay the debt, they may also apply for debt adjustment. Alternatively, the guarantor may apply to a court for a separate adjustment of guarantee or security liabilities. This may extend the payment period for the guaranteed or a secured debt, but the amount of the debt will remain the same.

The principles applied to guarantors are applied to co-debtors as well, which means that if a co-debtor cannot repay a debt, they can apply for debt adjustment. A co-debtor may also apply to a court for a separate adjustment of guarantee or security liabilities.