If a guarantor refuses to pay when a borrower defaults, the lender has legal routes to recover the money. Those routes can include court action and, ultimately, a charge against the guarantor's property. This article explains what the process looks like, what it can mean for both sides, and where to get free help before things go further.
This article gives general information about how UK guarantor loans work in practice. It is not legal or financial advice, and it does not apply to every situation. If you are facing a dispute, free advice from a regulated organisation is a safer starting point than acting on general information alone.
What does it mean when a guarantor refuses to pay?
A guarantor is a person who signs a legally binding agreement promising to repay a loan if the borrower does not. When a lender asks the guarantor to pay and the guarantor refuses, the lender can pursue that debt through the civil courts. The outcome can be serious for the guarantor, including a County Court Judgement (CCJ) and, in some cases, a charge placed on their home.
The borrower does not escape responsibility by having a guarantor. Both the borrower and guarantor remain legally liable, and the lender can choose to pursue either or both of them.
What risks does the guarantor face?
This is the part many people underestimate when they agree to act as guarantor. The risks are real and can be long-lasting.
A County Court Judgement (CCJ)
If the guarantor refuses to pay and the lender takes the matter to court, the court may issue a CCJ against the guarantor. A CCJ:
- Stays on the guarantor's credit file for six years
- Can make it harder to borrow money, rent a home, or open certain bank accounts during that period
- Is a matter of public record
The lender does not need to prove the guarantor cannot afford to pay. The signed guarantor agreement is the basis of the claim.
A charging order on property
If a CCJ is granted and the guarantor still does not pay, the lender can apply to the court for a charging order. This is a further legal step, not automatic. If granted:
- The debt is secured against the guarantor's property
- The debt may be recovered when the property is sold
- In some cases, and only as a last resort, the lender can apply for a forced sale, though courts treat this seriously and it is not common
If the guarantor owns a home, this risk is significant. Agreeing to be a guarantor on a loan means putting that asset at risk if the borrower stops paying and the guarantor cannot or will not cover the shortfall.
Damage to their credit file
Even before a CCJ, if the lender registers a default against the guarantor, that default can appear on the guarantor's credit file and stay there for six years.
How does this affect the relationship between borrower and guarantor?
Money disputes, particularly those involving courts and property, can put lasting pressure on relationships.
Most guarantors are family members or close friends of the borrower. When a lender starts pursuing the guarantor, it is common for:
- The guarantor to feel angry or exposed, especially if they were not fully aware of the borrower's financial difficulties
- The borrower to feel guilty, or to avoid communicating
- Both parties to feel helpless once solicitors' letters start arriving
Acting early is almost always better than waiting. The later in the process a dispute is addressed, the fewer options are available and the more the relationship is likely to suffer.
If you are the borrower and you know you are struggling, talking to the guarantor before the lender contacts them can help preserve trust. Free debt advice (listed at the end of this article) can help you put together a credible plan to present to the lender.
If you are the guarantor and you have received a demand, taking independent advice before refusing outright is worth considering. Refusing without legal grounds will not stop the process; it will accelerate it.
What steps does a lender typically take?
Lenders are regulated by the Financial Conduct Authority (FCA) and are expected to treat customers fairly. In practice, the process before court action usually involves several stages:
- The lender contacts the borrower about the missed payment or default.
- The lender issues a formal default notice giving the borrower an opportunity to put things right.
- If the default is not resolved, the lender will typically contact the guarantor and ask them to cover the outstanding amount.
- If the guarantor refuses, the lender can issue proceedings in the county court.
- If the court grants a CCJ, the lender can then apply for further enforcement, including a charging order.
This is a general outline. The specific steps and timescales can vary depending on the lender and the loan agreement. Checking the original agreement and seeking advice early gives both borrower and guarantor the best chance of managing the situation.
What can the borrower do if their guarantor refuses?
The borrower is still responsible for the debt. The guarantor's refusal does not remove the borrower's liability. However, there are some practical steps worth considering.
Contact the lender early. Many lenders will discuss a repayment arrangement if the borrower is transparent about their situation. A payment plan is not certain, but many lenders prefer it to a lengthy court process.
Seek free debt advice. Free debt advisers can look at the whole picture, including all debts and income, and help work out what is realistic. This can be more useful than negotiating with a lender alone.
Do not ignore letters. Letters from lenders and solicitors contain time-sensitive information. Missing a deadline to respond can mean losing the ability to contest certain decisions.
What can the guarantor do if they are being chased?
If you are the guarantor and you have received a demand from a lender:
Take advice before refusing. Citizens Advice and MoneyHelper can explain what the guarantor agreement says and what options exist. Refusing outright without understanding the consequences may make things worse.
Check the agreement. The original loan agreement sets out when the guarantor becomes liable and what notice the lender is required to give. A free debt adviser can help you read it.
If you believe you were misled, for example if the nature of the guarantor obligation was not properly explained to you at the time of signing, Citizens Advice can explain whether you have grounds to challenge the agreement. Not all challenges succeed, and legal advice from a solicitor may be needed for more complex disputes.
If you can pay but are refusing to, be aware that the court process is likely to result in a CCJ and potentially a charging order. This may cost more in the long run, and may be more damaging to your credit file and financial position than reaching an arrangement with the lender.
Warnings
Charging orders are serious. If the guarantor owns a home and a charging order is granted, the debt is secured against that property. This is a significant financial risk that was present from the moment the guarantor agreement was signed.
A CCJ lasts six years. It can affect the guarantor's ability to get a mortgage, rent a flat, or access other financial products for the full six years it remains on their credit file.
Refusing to engage does not make the debt go away. Court proceedings can continue in the guarantor's absence, and a judgement can be made without the guarantor appearing in court.
Free debt advice is available now. There is no need to face this situation alone or wait until court papers arrive.
Where to get free help
If you are the borrower or the guarantor and you are worried about what comes next, free regulated advice is available:
- StepChange Debt Charity: 0800 138 1111 (freephone, including from mobiles). Online help also available at stepchange.org
- National Debtline: 0808 808 4000 (freephone). Advice for people in England, Wales and Scotland
- MoneyHelper: 0800 138 7777 (freephone). Government-backed money guidance service
These organisations do not charge for advice. They are not lenders and have no financial interest in the outcome. Speaking to them does not affect your credit file.
Citizens Advice can also help with understanding legal documents and whether you have grounds to challenge a claim: citizensadvice.org.uk
Frequently asked questions
Can a lender chase the guarantor before chasing the borrower?
In most cases, the lender will first pursue the borrower. However, if the borrower does not pay, the lender is entitled to contact the guarantor directly. The exact process depends on the loan agreement. Checking the original contract will clarify at what point the guarantor becomes liable.
What happens to the guarantor's credit file if they refuse to pay?
If the lender takes court action and obtains a CCJ, it will appear on the guarantor's credit file for six years. This can make it harder to borrow, rent property, or access certain financial products during that period.
Can the lender put a charging order on the guarantor's home?
If the lender obtains a CCJ and the guarantor still does not pay, the lender can apply for a charging order on the guarantor's property. This secures the debt against the property. It is not automatic and requires a further court application.
What can the borrower do if their guarantor refuses to pay?
The borrower remains responsible for the debt. Contacting the lender early and seeking free debt advice from StepChange or National Debtline can help the borrower explore a repayment arrangement before the situation escalates.
Does a guarantor have any legal grounds to refuse?
A guarantor may have limited grounds to dispute liability, for example if the agreement was signed under duress or was not properly explained. Citizens Advice can help assess whether any grounds apply. In most circumstances, a signed guarantor agreement is legally binding.
Will the relationship between borrower and guarantor always suffer?
Not necessarily, though disputes over money frequently cause strain. Acting quickly, communicating honestly, and seeking free debt advice early can reduce the chance of the situation reaching the courts.
More in this guide
For a broader explanation of how guarantor loans work, including what lenders look for in a guarantor and what both parties agree to, see the Guarantor loans guide.
Sources
Information in this article draws on guidance published by the Financial Conduct Authority (fca.org.uk), MoneyHelper (moneyhelper.org.uk), and Citizens Advice (citizensadvice.org.uk).
- Can a lender chase the guarantor before chasing the borrower?
In most cases, the lender will first pursue the borrower. However, if the borrower does not pay, the lender is entitled to contact the guarantor directly and ask them to cover the debt. The exact process depends on the loan agreement. Checking the original contract will clarify at what point the guarantor becomes liable.
- What happens to the guarantor's credit file if they refuse to pay?
If the lender takes court action and obtains a County Court Judgement (CCJ) against the guarantor, that CCJ will appear on the guarantor's credit file for six years. This can make it harder for the guarantor to borrow money, rent property, or obtain other financial products during that period.
- Can the lender put a charging order on the guarantor's home?
If the lender obtains a CCJ and the guarantor still does not pay, the lender can apply to a court for a charging order on the guarantor's property. This secures the debt against the property, meaning the debt may be recovered when the property is sold. This step is not automatic and requires a further court application.
- What can the borrower do if their guarantor refuses to pay?
The borrower remains responsible for the debt throughout. Talking honestly with the lender as early as possible can open up options such as a repayment arrangement. Free debt advice from organisations like StepChange or National Debtline can help the borrower work out a realistic plan before the situation escalates further.
- Does a guarantor have any legal grounds to refuse?
A guarantor may have limited grounds to dispute liability, for example if the loan agreement was signed under duress or was not properly explained. Citizens Advice can help a guarantor understand whether any such grounds apply in their case. In most circumstances, a signed guarantor agreement is legally binding.
- Will the relationship between borrower and guarantor always suffer?
Not necessarily, though disputes over money frequently cause strain. Acting quickly, communicating honestly, and seeking free debt advice early can help prevent the situation from reaching the courts, which is likely to reduce the damage to the relationship.