On Being a Guarantor for a Loan
- Should a person be a guarantor? There are two sides to the question.
Shlomo Hamelech warns several times against being a guarantor (Mishlei
11:15; 17:18; 20: 16-17 and other verses) and the Gemara also says that it
is good to avoid it (Yabamos 109b). The Rambam writes that a talmid chochom
does not become a guarantor. (Hilchos Dayos 5:13) The ShLA Hakodesh
writes, “It is good for a person to be yielding when dealing with other
people. Nevertheless, he should avoid being a guarantor, as Chazal
instructed, “A person should always guard himself against becoming a
guarantor.” Therefore I warn and command my children and students never to
be a guarantor for anybody, for I, too, have been sworn by my parents not to
be a guarantor and hereby command you with all the force of a command to
avoid it.” But if a person refuses to be a guarantor, he deprives the
needy person of the possibility of getting a loan. Indeed, it means that no
one will lend out money. How can we resolve these warnings against being a
guarantor with the necessity of making it possible for the poor to receive
loans? The warning should be understood as cautioning us to take the matter
of being a guarantor very seriously and not to sign as a guarantor simply
because we want to help someone out without examining the matter very
carefully. A person should realize that to sign as a guarantor is a serious
thing, and that the lender will turn to the guarantor to collect the loan if
the borrower doesn’t pay. A person who signs as a guarantee must be
willing and able to repay the loan. If he’s not, he shouldn’t sign, no
matter how reliable the borrower may seem to be. A guarantor must be certain
that the person for whom he is signing is honest and straight in all
business matters, for signing is a commitment to repay the loan if the
borrower doesn’t come though. Unfortunately, there are many who have
gotten into serious trouble by signing for anyone who asked. - It is forbidden for the borrower to borrow with the intention of having
the guarantor repay the loan. In any case, if the guarantor repays a loan,
the borrower is obligated to reimburse the guarantor for the money he paid
the lender if the following conditions are met: If the borrower asked the
guarantor to guarantee his loan, if there are witness that the guarantor
repaid the loan or a document in which the lender states that the guarantor
repaid the loan to him, if there is a document which establishes the
guarantor, and if the documentation of the loan is in the possession of the
guarantor. The fact that the guarantor possesses that documentation is not
itself sufficient proof that he repaid the loan. There must also be
witnesses. The verse, “The wicked borrow and do not repay,” applies to a
person who borrows without any intention of repaying either the borrower or
the guarantor. - Can the guarantor change his mind? if the loan has not yet been made, yes,
even though a kinion was made. If the loan was made on the basis of
the guarantor’s promise to guarantee the loan, but before he made a legal
commitment, the lender cannot collect from the guarantor if the guarantor
changes his mind and the borrower fails to pay back the loan. But if , at
the time when the loan was made, the guarantor committed himself to
guarantee the loan, he cannot back out.
