Can a guarantor sue a discharged bankrupt for money paid to creditors on behalf of the bankrupt following the bankruptcy?
I signed as guarantor of a loan for a friend. He declared bankruptcy in June 2003, and was thereby protected from his creditors. I did not. One of his creditors obtained a court order and was thereby able to garnish my wages. In that way, I paid off the entire debt by 2005. Assume that my friend was discharged by 2004.
Can I now take court action against my friend to recover the amount I paid out on his behalf?
Unless you can prove some sort of fraud or misrepresentation on your friends part that caused you to become their guarantor (when you otherwise wouldn’t have if you had known the truth about their finances), no you are not likely to be able to recover the debt from your friend.
That’s not to say you can’t ask your friend to repay you – it’s simply unlikely that you can compel them to pay you if they choose not to co-operate with your request.
Hopefully you didn’t yell and scream at them too much when they filed bankruptcy – if you did, it might be unreasonable to expect them to repay you now.