Sued as a Guarantor: Do You Have to Pay, and How Much?

Sued as a Guarantor: How Much Are You Liable For?

This page is for people who signed as a guarantor for a relative, friend or acquaintance and then received a demand letter or a court summons, even though they never used the money themselves.

Short answer: A guarantor can still be liable under the guarantee, but the law gives several protections. For example, the creditor must send the guarantor a written notice within a set time, and the guarantor is liable only up to what was agreed. Which rules apply to you depends on the date you signed the guarantee. The first step is to find the signed guarantee, check its date, and note when you received the letter or summons.

Who is a guarantor

A guarantor is someone who agrees with the creditor that if the debtor does not pay, the guarantor will pay instead. The guarantor is a backup, not the main debtor. The liability arises only when there is a main debt and the debtor fails to pay it.

The Civil and Commercial Code was amended in 2014 (B.E. 2557)

A major amendment on guarantees was made in 2014 (Amendment No. 20), which made several guarantor rights clearer. A guarantee signed before the amendment and one signed after it may be governed by different rules, so the signing date and the transitional provisions of the amending law matter. A lawyer must check which set of rules applies to your contract. This page describes the general rules; it does not confirm that the new rules apply to your guarantee.

Where are you now?

1. You received a notice that the debtor defaulted

Within 7 days: keep the letter and the envelope, note the actual date you received it, ask the debtor about the status of the debt, and take out your guarantee to check when you signed and the maximum amount you guaranteed.

2. You received a court summons (sued together with the debtor)

Within 7 days or before the hearing date, whichever comes first: note the hearing date and the deadline for filing a defence stated in the summons, gather the guarantee and the main contract, and take the documents to a lawyer for assessment. Do not let the hearing date pass without acting, because you may be treated as having defaulted in the case.

3. You were sued but never received any notice from the creditor

Within 7 days or before the hearing date, whichever comes first: write a short note listing every document you received from the creditor and when, including the address the creditor used. This relates to the rule on notifying a guarantor within 60 days, which may affect part of the interest.

4. The creditor let the debtor pay later or extended the time without asking you

Within 7 days: keep the evidence of the extension, such as messages, a restructuring document or a new payment schedule. This relates to the rule that giving the debtor more time without the guarantor's consent may release the guarantor.

What not to do

• Do not sign new documents from the creditor, such as an extension consent or an acknowledgment of the debt, without reading them and talking to a lawyer. They may affect rights you currently have.
• Do not assume the debtor will sort it out and skip court. If you are a defendant, failing to file a defence or attend may lead the court to decide on the claimant's side alone.
• Do not pay on the debtor's behalf without keeping proof and a written record of the payment. A guarantor who pays can claim the money back from the debtor, but must be able to show how much was paid and when.

Steps under the law

1. The debtor defaults on the main contract.
2. The creditor must notify the guarantor in writing within 60 days of the debtor's default. If it does not, the guarantor is released from interest, damages and ancillary charges arising after those 60 days (the principal is not automatically wiped out). A lawyer must check whether this rule applies to your contract.
3. The creditor sues the debtor and the guarantor. If the creditor is a business, the case often falls under the consumer case procedure, where the court sets one day for mediation, the defence and the evidence. A defendant who does not attend and has not filed a defence may be treated as having defaulted on the defence. In an ordinary civil case, the general rule is 15 days from receiving the summons to file a defence, but follow the deadline stated in the summons.
4. In the defence, the lawyer will look at the amount owed, interest after the notice period, the guarantee limit, any clause making the guarantor liable as a joint debtor, any extension given to the debtor, and any defences of the debtor that a guarantor may raise.
5. The court gives judgment. If you lose, the creditor may enforce it. A guarantor who has paid can claim reimbursement from the debtor.

Documents a lawyer needs to see before assessing your case

• The signed guarantee (check the date and the guaranteed limit)
• The main contract, such as a loan, hire-purchase or credit agreement
• Any notice or demand letter you received, with the envelope and proof of the date received
• The court summons and the complaint (if you have been sued)
• Evidence that the creditor allowed or restructured payment for the debtor
• Proof of any payment you made on the debtor's behalf
• For a guarantee on a hire-purchase car: the auction result and any shortfall notice

Relevant laws

• Civil and Commercial Code, Section 680: the meaning of a guarantee
• Section 681: the extent of the guarantor's liability, and requirements when guaranteeing future or conditional debts (as amended in 2014)
• Section 681/1: a clause making the guarantor liable as a joint debtor is void, with an exception for guarantors that are juristic persons (the lawyer must check the details)
• Section 686: the creditor must notify the guarantor in writing within 60 days of the debtor's default
• Section 700: the guarantor is released when the creditor gives the debtor more time without the guarantor's consent
• Sections 691 and 693: the guarantor benefits from a reduction of the debt and may claim reimbursement from the debtor after paying
• Consumer Case Procedure Act B.E. 2551 (2008), Sections 24 to 27: hearing date, mediation, defence and the effect of non-attendance in consumer cases
• Civil Procedure Code, Section 177: the time limit for a defence in ordinary civil cases

Frequently asked questions

Must a guarantor pay everything?
A guarantor is liable no further than the limit stated in the guarantee. If the guarantee covers future or conditional debts, the amended law requires certain key points, such as a maximum amount, to be stated. That is why the actual document matters most.

The contract says I am liable like a joint debtor. Is that valid?
Under Section 681/1 such a clause is void, but there is an exception for guarantors that are juristic persons, and the date of your contract matters. A lawyer should check before any conclusion is drawn.

The creditor never notified me. What follows?
Section 686 requires written notice to the guarantor within 60 days of the debtor's default. If it was not given, the guarantor is released from interest, damages and ancillary charges arising after the 60 days, but this does not release the guarantor from the principal.

The creditor gave the debtor more time without asking me. Am I still liable?
Under Section 700, extending time to the debtor without the guarantor's consent may release the guarantor. But if you consented to that particular extension, the result differs. A clause giving consent in advance, signed with the guarantee, is unenforceable under the 2014 amendment, depending on the contract date. The real documents must be read.

If the debtor gets a debt reduction, does the guarantor too?
As a general rule the guarantor benefits when the debtor's debt is reduced (Section 691), but the details depend on how the reduction was made. A lawyer will check the documents between the creditor and the debtor.

Does the new law apply to a guarantee signed before 2015?
This page cannot answer that, because it depends on the transitional provisions of the amending law. In general, a law does not apply retroactively to contracts already made. A lawyer should check which rules govern your contract.

If I have already paid for the debtor, can I get the money back?
A guarantor who pays has a right of reimbursement against the debtor. Keep receipts, transfer records and every document the creditor gave you.

Conclusion

A guarantor is not liable without limit. The law addresses the guaranteed amount, the 60-day notice, extensions given to the debtor, and clauses that are void. But the rules that actually apply depend on the date you signed and the facts of each case. If you would like your case reviewed, consider bringing the documents listed above to a lawyer to check which defences are available.