ENTER CONSULTING ZONE provides specialized advice on the rights and obligations of a guarantor in a loan, as well as the provisions of the Insolvency Framework regarding the handling of guarantors in cases where the borrower and/or guarantor applies for a Personal Payment Plan.

According to the legislation, a "Guarantee Agreement" refers to a contractual arrangement wherein the person offering the guarantee, i.e., the "guarantor," agrees to fulfill the promise or obligation of a third party, such as the borrower.
In the unfortunate event that the borrower is unable to fulfill their obligation, the guarantor is subsequently obliged to perform the same.

Personal Payment Plan (Insolvency Law)

In the context of Personal Payment Plan, the handling of guarantors pertains to natural persons who have provided guarantees for debts of either natural persons or corporations.
According to the insolvency legislation governing Personal Payment Plans, the process mandates that guarantors be fully informed of the debtor's debt verification process, and that they be provided with details of the repayment plan to be agreed upon.


In the context of bankruptcy, guarantors shall only bear responsibility for the residual debt resulting from the difference between the total outstanding debt and the value of the secured asset (e.g. mortgage) in their possession.

For example,

*If the outstanding debt is less than the value of the secured property of the borrower, i.e. the mortgage, then the guarantors are released from their obligations.

*If the outstanding debt is greater than the value of the mortgaged property of the borrower as determined in the appraisal, then the creditor/bank may take legal action against the guarantor for the amount of the difference that is not covered by the mortgage.

In the event of disposal of secured property (mortgage) in exchange for debt, where the estimated value of the secured property is greater than the debt, any amount already paid by the guarantor must be refunded.