Borrower unable to pay loan. How to save myself as a guarantor?

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asked on Aug 26, 2019 at 07:49
edited on Nov 30, 2019 at 21:21
My friend and I are guarantors for our colleague for his cooperative loan. Early this year we found out that he was suspended from work due to discipline and internal issues. He told us still under investigation and not suspended from work. We texted him again in March but no reply. Call not picked up. Until we received 2nd notice from the cooperative that he has overdue to pay. We didn't receive 1st notice and now being told we have to pay his overdue and take over his debt or else our name will be sent to CTOS and will be sued.

When I texted him, he said he is no longer working and couldn't find a job for the past 4 months. He didn't update us when we asked him to update us. But yesterday, I found out that he has been working as GrabFood driver. My friend and I, we don't have enough to pay his arrears and not enough to take over payment because we too have our financial issues. What can we do to help ourselves? And should we get a lawyer for this?
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3 Answers

answered on Aug 26, 2019 at 10:57
edited Nov 30, 2019 at 21:40

Nowadays there are perils and setbacks when one has signed as a guarantor.

Although the new Bankruptcy Act 2017 states that a social guarantor cannot be bankrupted, other modes of recovery can be initiated by the judgement creditor.

Garnishment of bank accounts and threats of writ of seizure and sale (WSS) are common modes of debt recovery.

If a guarantor has been made a judgement debtor, the judgement creditor can inform Credit Reporting Agencies like CTOS and RAM.

And should we get a lawyer for this?
You can also approach Free Legal Aid Centers for appropriate advice.

It is always not safe to fight other establishments as their bill collectors are exceptionally "tough" unlike banks approved bill collectors who has to follow Bank Negara Malaysia guidelines. There was a police report on me for "defamation" by one cooperative early this year. In the end the case was settled by official announcements by Kementerian Dalam Negeri (KDN) (Home Ministry) in the KDN and Immigration websites. No more such "fights" for me.. too old for stresses.
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answered on Aug 26, 2019 at 15:46
edited Nov 30, 2019 at 22:13
Is there anything I can do to ensure the principal debtor pay the debt?

And the recent amendments of the new bankruptcy law stated that in order for creditor to recover the loan from guarantor, the creditor needs to proof that they have attempted to get the debtor to pay the loan which includes: Notice of Demand, Judgment Debtor Summons, Garnishee Proceeding, Seizure and Sale and Bankruptcy Proceeding. Can this be applied to my case?
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answered on Aug 27, 2019 at 00:11
edited Nov 30, 2019 at 22:15

Can this be applied to my case? 
Only the bankruptcy proceeding does not apply to you.
But if you did not inform the cooperative of your residing address, you can be bankrupted without knowing it. You may only be able to set aside the bankruptcy proceedings if you manage to attend by invoking your status as a guarantor in bankruptcy court.

is there anything I can do to ensure the principal debtor pay the debt?
There is nothing much you can do if the principal debtor really cannot pay.
The most you can do is to channel the bill collectors to him if you have his latest hideout, just to get them off your back.

How much is the defaulted amount? 
How much is the original loan?
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