Le cautionnement is the personal security par excellence. It aims to add a third person (guarantor) alongside the main credit debtor who commits, under certain conditions, to intervene for the debtor in case of repayment difficulties. A few words of explanation.
Concept
To act as a guarantor for someone means committing to pay on their behalf if they do not pay their debt themselves. The guarantor is a natural or legal person (such as a financial institution) who contractually commits to a creditor to pay them if the debtor defaults at maturity.
Anyone can act as a guarantor if they are recognized as capable and, of course, solvent.
The guarantor must be aware that they are committing their own assets for the repayment of a debt contracted by a third party (the debtor), if this third party does not fulfill their commitment.
Types of Guarantee
We distinguish between simple guarantee and joint guarantee:
- In a simple guarantee, the creditor must first pursue the main debtor, and in case of multiple guarantors, the debt will be distributed proportionally among the guarantors;
- In a joint guarantee, the creditor can immediately pursue the guarantor(s) for the entire debt.
In practice, the creditor has every interest in adding a joint and indivisible guarantor to their debtor.
The Guarantee of a Consumer Credit
Information for the Guarantor
The lender must inform the guarantor:
- of the amount that is guaranteed: the guarantee only applies to this amount increased by late interest. To this end, a copy of the credit contract must be provided in advance and free of charge by the lender to the guarantor;
- When the borrower is late in payment of two installments or at least one-fifth of the total amount to be repaid;
- Of the payment facilities granted to the consumer.
Conditions to Act Against the Guarantor
The borrower must be in default of payment of at least two installments. In this case, the credit contract will be terminated and the borrower will be listed with the National Bank of Belgium.
Amount and Duration of the Guarantee
In a credit contract concluded for an indefinite period, the guarantee:
- cannot cover a period exceeding 5 years;
- can only be renewed at the end of the period with the express agreement of the guarantor.
The Gratuitous Guarantee
The gratuitous guarantee covers the scenario of a person committing alongside the main debtor without deriving any financial benefit.
Since December 1, 2007, the gratuitous guarantee is only valid if certain legal conditions are met:
- A separate contract from the initial credit contract;
- The duration must be indicated in the guarantee deed;
- The guaranteed amount must be mentioned;
- The contract must include handwritten mentions by the guarantor: ” by acting as guarantor for…within the limit of the amount of…(in figures) covering the payment of the principal and interest for a duration of…I commit to reimbursing the creditor of…the amounts due from my assets and income if, to the extent that…does not fulfill it themselves”;
- The guarantor’s commitment must be proportional to their repayment capacity;
- The heirs’ obligations are limited to their respective share in the inheritance;
- The creditor must inform the guarantor about the execution of the main obligation. They must do so at least once a year in case of regular execution;