Law of Debitors and Creditors

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Conclusion

In order for Josephine to have been able to obtain the loan her parents had to sign the guarantor agreement which states that they guarantee the repayment of the loan and also guarantee that the payments will be made in a timely fashion. When a guarantee is absolute or unconditional, the creditor need not proceed against the security upon the default of the principal debtor, but rather may sue the guarantor. An unconditional guarantee is one whereby the guarantor agrees to pay or perform a contract on default of the principal without limitation. It is an absolute undertaking to pay a debt at maturity or perform an agreement if the principal does not pay or perform. Because Josephine and Tommy are both considered insolvent and this can be proven by financial record from Tommy and Business debts and meager deposits from Josephine it is very likely that Helpful Bank will execute their right as listed in the guarantee agreement to begin collection efforts from the Guarantor . First step in achieving their repayment of the loan after exhausting all efforts to contact Josephine and Tommy is to attempt to contact the guarantors. If initial contact can not be made a motion to file suit for unpaid loan will begin. If the court does not receive an answer from the parents, Helpful bank could see a default judgement in their favor . Because Josephine is a minor the guarantor can be seen liable for the loan and is likely to be responsible for its repayment.