AZE.US
Taking out a bank loan has become a common way for many people in Azerbaijan to deal with urgent financial needs.
But behind many credit agreements there is not only the borrower. There may also be a guarantor – a person who does not receive the money but assumes a serious legal and financial risk.
Banking specialists and lawyers warn that acting as a guarantor is not a symbolic gesture or a simple favor for a friend or relative. If the borrower fails to repay the loan, the bank may demand payment not only from the borrower but also from the guarantor.
When a loan payment is delayed, the bank usually first contacts the borrower, calculates late-payment interest and demands repayment.
At the early stage, the bank may try to assess the client’s financial situation and discuss possible restructuring. But if the debt remains unpaid for a longer period, the case may be transferred to a problem-loans department and later taken to court.
In such cases, the bank can seek payment of the principal debt, interest and penalties. After a court decision, enforcement may be directed against the debtor’s bank accounts, income or property.
The key risk for a guarantor is that, in many credit agreements, the guarantor is responsible together with the borrower. This means the bank does not always have to wait until all measures against the main debtor are exhausted. It may address both the borrower and the guarantor at the same time.
Banking specialist Ismayil Mammadov said the exact scope of responsibility depends on the terms of the loan agreement. In practice, however, a guarantor often ends up exposed to the same financial risk as the person who actually received the loan.
Lawyer Anar Ramazanov also noted that many people agree to become guarantors without fully understanding the consequences. Under the law, unless the contract provides otherwise, a joint guarantor carries the same rights and obligations as the borrower.
At the same time, a guarantor who pays off another person’s debt has the right to demand that money back from the original borrower. This is known as a recourse claim. To do so, the guarantor should keep all official documents confirming the payments, including bank receipts, payment orders and account statements.
After repaying the debt, the guarantor may file a lawsuit against the borrower and seek repayment of the amount paid, as well as related expenses, including court costs and state fees. In some cases, other damages may also be claimed if they can be proven.
But in practice, this process can take time, money and nerves. That is why specialists advise citizens not to sign a guarantor agreement simply because a relative, friend or acquaintance has asked them to do so.
Before becoming a guarantor, a person should carefully read the loan agreement, understand the amount of the loan, repayment schedule, penalty terms and the borrower’s real financial situation. The most important question is simple: are you ready to repay this debt yourself if the borrower stops paying?
For many people, that is the uncomfortable but honest test. In credit relations, a guarantor’s signature is not just an act of trust. It is a legal obligation.
AZE.US