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Bitter Lessons as a Guarantor That Almost Broke My Family

For about 10 years between 2000 and 2010, things were very rosy; a promotion, mortgage nearing completion, a new business, and a happy family. Though my salary at a local secondary school was not much, my wife and I crafted a very good idea to open a family business where she runs the business as I work at school. Our bakery was running well but still in the infancy and required a lot of financial support. Everything came to a halt after I agreed to guarantee a loan for one of my colleagues.

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How I became a guarantor to a workplace colleague

When John approached me to guarantee him a personal loan, I did not hesitate because we had worked together for over ten years. However, I failed to read guarantor loan reviews and did not ask him whether he had exhausted all the lines of credit before guaranteeing his loan. I guaranteed his entire loan which left me culpable to repaying it in case he defaulted. About 3 months after getting the loan, John was transferred to Manchester and this is where his problems began. His first born son fell ill and his wife lost her job. These issues pushed John between a rock and a hard place making him to default.

The bank’s decision to follow me to clear the loan

After failing to submit loan repayments for 3 months, the lending bank came directly to me. I was called on my phone and asked to visit the nearest Royal Dutch Bank as quickly as possible. The credit manager informed me that the borrower had defaulted and I had to take full charge of repaying the loan. I asked for a leave of 1 month to check on my friend.

A visit to John’s home in Manchester brought me face to face with the real problem. John had sold his car, home and was contemplating filing for bankruptcy. At this point, the reality dawned on me that the entire loan of £25,000 was now on my shoulders. Many questions ran through my head on my flight back to London. How would I service the loan? How do I tell my wife about it?

The real impact of John’s guarantor loan default

When I gathered the courage to tell my wife, she was very angry at me. Because we were planning to take another loan to boost our upcoming business, that now became impossible. For several days, my wife was very depressed and she kept wondering why I did not tell her about the mortgage in the first place. This became a serious problem and she even started contemplating divorce.

Because of the shock, our new bakery suddenly closed because I had to go to school and my wife was very depressed and had no interest in running it. Many clients, especially in the neighbourhood, kept asking about the cakes through social media and direct calls. It appeared like my family was destined to break apart from that moment.

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The assistance of a financial advisor

On my way back to report that I had found John and discuss the best way to address the issue with the credit manager at Royal Dutch Bank, something crossed my mind to seek assistance from an expert. On my smartphone, I checked the nearest financial services advisor and knocked her door in minutes. Thanks to Edith, I learnt a number of lessons that left me in a better position to address financial issues at home, work and in the business.

  • First, Edith made me realize that though a problem had emerged, I could be able to address it if I had the good will. She made me relook at my systems to realize my extra potential.
  • As opposed to slipping into the shoes of John and start paying the amount he was making every month, Edith advised me to use one of my assets and attach it to the loan. This helped me to lower the interest rates and get lower monthly payments.
  • Because I used the house as collateral, the bank did not look at me as a high-risk client. Therefore, I was still able to get the additional credit that I used to revamp our bakery. This made my wife appreciate my efforts and she threw herself back into the bakery.

When you decide to become a guarantor, it is important to read guarantor loan reviews and take the guarantee like a personal loan. However, as oppose to waiting for issues to arise to get expert advice, seek that help before agreeing to become a guarantor.