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Can a loan guarantor sue the debtor for non-payment?


08-Jul-2024 (In Recovery Law)
Hello, I want to understand if a loan guarantor can sue the debtor when the debtor fails to repay the loan. Additionally, the debtor hasn't signed any repayment contract with the guarantor. In this scenario, the guarantor has pledged their property as collateral, which the bank has put up for auction. I'm curious to know if the guarantor can pursue legal action against the debtor and their property. Also, could the debtor face jail time for failing to repay the debt?
Answers (3)

Answer #1
827 votes
Yes, a guarantor to a loan can sue the principal debtor if he defaults and the guarantor had to pay on his behalf. In fact, as per section 145 of the Contract Act, there is an implied promise to indemnify the surety. Also, as per section 140 of the said Act, the surety/guarantor steps into the shoes of the creditor and has every right against the principal debtor/ borrower once he i.e. the guarantor has satisfied the creditor's debt.
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Advocate Bidit Kumar Deka

Adv. Bidit Kumar Deka

LawRato Delhi | 25+ Answers
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Answer #2
595 votes
It's depend on your transaction and agreement. Come with entire picture what u signed or not then only actual picture comes. But as per law their is only civil case again you for all no criminal case like arrest and all that taken against you. So contest it with your probable defense. U can contact me at my number.
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Advocate Vikram Seth

Adv. Vikram Seth

LawRatoDelhi | 25+ Answers
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Answer #3
963 votes
Yes you can intiate the recovery proceedings against the original debtor once you pay the loan amount to the bank and obtain all the original document related to loan. However debtor can not be given jail term as it is civil matter.
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Advocate Brajesh Kumar

Adv. Brajesh Kumar

LawRatoDelhi | 25+ Answers
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