What happens if someone has guaranteed my debts?

In some cases, the only way a person can obtain finance is by having a third-party ‘guarantee’ their application. A young person may have been turned down for a loan as they have not yet built a good enough credit score. A family member may have agreed to guarantee the debt thereby reducing the lenders risk considerably.

The person that has stood as guarantor will become liable for the debt in the event the original debtor cannot repay it e.g. the parent will become responsible for the loan repayments if their child stops paying.

If the original debtor enters an IVA, the debt will be listed in their proposal. Although the IVA should still be workable, the lender will want to communicate directly with the guarantor to arrange future repayments.