Recently I was reading a news article about a con-woman in New Zealand who managed to swindle $1.5 million from her partner. This caught my attention because it was such a large sum of money. How is it possible she was able to con someone out of that much? The answer – she had her partner, and his parents sign as guarantors to her business loan.
Under the guise of being a successful restaurant owner she convinced her partner that she could set up a new café in New Zealand. She produced bank statements to the bank, correspondence from her lawyer and then required her partner and his parents to guarantee the loan personally. Her partner’s parents had a large family home and substantial retirement savings so the loan was granted and she was given complete control of the funds from the loan.
Unfortunately, as soon as the business started to fail, she left the country never to return. Later it was found that the bank statements were forged, the lawyer didn’t exist and that she has never been a successful restaurant owner. Despite these revelations, the guarantee obligations were very clear. If she didn’t pay, the guarantors would have to. This led to her partner and his parents selling the family home to pay the loan, but even that did not cover the whole amount. It destroyed their retirement savings and completely turned their lives upside-down.
This is a grave reminder of the harsh obligations on guarantors. If you are ever guaranteeing a loan for anyone you should make sure you can trust them. The financial ramifications can be brutal if the borrower fails to pay the loan as it means the bank can use any means necessary to pay it off, including selling your personal assets as guarantor.
If you are considering being a guarantor for someone and are not sure about your obligations, pick up the phone and contact us today. We can ensure that you are fully aware of your obligations and we will give you a fixed price to attend to the work.
If you would like to read the article, it can be found here: https://www.abc.net.au/news/2019-09-03/con-artist-love-fraud-victims-investigate-lezlie-manukian/11300436