AZE.US
A person in Azerbaijan can be held responsible for another borrower’s loan only if there is a valid written guarantee agreement. A verbal promise to act as a guarantor is not sufficient.
Lawyer Misira Khalilzade explained the rules governing loan guarantees and when debt may be recovered from a guarantor’s salary or pension.
Under a guarantee agreement, the guarantor accepts responsibility before the creditor for the borrower’s full or partial performance of the loan obligations.
Guarantee Must Be in Writing
Under Article 471 of Azerbaijan’s Civil Code, a guarantee agreement must be concluded in writing. Failure to meet this requirement makes the agreement invalid.
A verbal promise to guarantee a loan, statements from witnesses or a later claim that such an arrangement existed cannot replace a written agreement.
Without a valid document, a person cannot legally be recognized as a guarantor or held responsible for another individual’s loan.
A guarantee is an additional obligation linked to the underlying loan agreement. If the principal obligation is declared invalid, the guarantee securing it also loses its legal force.
However, an invalid guarantee agreement does not automatically cancel the original borrower’s debt.
When Garnishment Is Permitted
A guarantor’s salary or pension cannot be garnished merely at a creditor’s request.
Compulsory recovery generally requires:
- A valid written guarantee agreement;
- A debt arising under that agreement;
- A legally enforceable document;
- Enforcement proceedings initiated in accordance with the law.
Article 43.1.2 of Azerbaijan’s Law on Enforcement allows claims to be directed against a debtor’s salary, pension, scholarship and other income. Once a guarantor becomes legally liable for the debt, that individual may also be treated as a debtor in enforcement proceedings.
How Much Can Be Withheld?
When a court judgment or another legally recognized enforcement document is executed, deductions from salary and equivalent income generally cannot exceed 50%.
The amount is calculated from the income remaining after taxes and other mandatory deductions. If several enforcement documents are being executed simultaneously, the debtor must generally retain at least half of the applicable income.
The same rules apply to pension garnishment.
A higher limit of up to 70% applies to certain categories, including alimony, compensation for injury, payments related to the loss of a family provider and damages caused by a crime. Ordinary bank-loan debt does not fall under those exceptions.
Challenging an Unlawful Garnishment
If someone is recognized as a guarantor without a written agreement, or money is withheld without a valid enforcement document, the legality of those actions can be challenged.
Khalilzade advised affected individuals to use the legal remedies available to protect their rights, including court action and appeals against measures taken during enforcement proceedings.
AZE.US