Big Topic for today, but straightforward advice: Don’t do it!
This was one of the many (many) stupid financial decisions of our past, we had a loan and it was backed by a family member. (We weren’t creditworthy, but they could still offer us money this way, that should’ve been red flag number 1!)
All hunky-dory when you’re paying it, but when we were struggling with other debts, they insisted on full payments still. These people push harder because they can: If you can’t pay they will hassle your guarantor!
When we got debt advice, they told us this would be exempt from any payment reduction plan as we had to pay it or the guarantor would be squeezed for it….and they were right.
We carried on paying it as a priority bill but once or twice we were a couple of days late: these people rang and emailed us and the guarantor a total of 20 times in 3 days!
We kept going and put any spare money in (in the last year, after stopping the credit) and got it paid off ASAP. We were glad to be rid of it and so was the guarantor!
** As an aside, if someone asks you to guarantor their loan, please don’t. However desperate the situation may seem, there must be another way.
Find out what they want it for… is it essential? If it’s something really essential (not a new car or TV) then maybe it can be borrowed or bought second hand? Or if it’s to pay other bills/debts, have they tried a reduced payment plan or professional advice?? Please try anything else first.**
Reading my daily proverb today, it’s main theme is adultery, but there are a few verses at the start of chapter 6 that talk about being a guarantor for someone: it says don’t! Not for brother or neighbour. You are trapped in folly. You need to beg to be released, like now….strong stuff I wish I’d known 7 or 8 years ago.
If you have been trapped, whether you’re the borrower or the guarantor, the message is clear: It’s foolish, get out now. Arrange with them to release you or (more likely) put everything in you can to get out quickly.
A budget and debt advice can help and you can request they only contact you in writing, not on the phone (which helps keep you calmer and gives you a record of what they say)….so please don’t think it’s hopeless, nothing is.
We survived it, but the strain it put on our finances and our relationship with guarantor isn’t worth it….please find another way.