If I signed as a guarantor for my good friend’s business and now he is beginning to default on the loans, what can I do to protect myself?
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If I signed as a guarantor for my good friend’s business and now he is beginning to default on the loans, what can I do to protect myself?
Any information you can provide would be very helpful.
Asked on September 24, 2016 under Business Law, Florida
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
There really isn't much or anything you can do to protect yourself. When you sign as a guarantor, you become as liable for the debt as the signer; therefore, if he stops paying, the lender or seller is free to sue you for the money instead of or in addition to your friend. In guarantying the debt, you contractually obligated yourself of the debt; you have to pay it, and there is no legal way to avoid paying when your friend defaults, if the lender/seller chooses to seek payment from you. This is why you should *never* guaranty another's obligations or debt. If the amount is truly too much for you to pay, you may need to look to bankruptcy as an option. If you believe that your friend *could* pay but is choosing to not pay, you could sue him for any amounts you are yourself required to pay.
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