Being a Guarantor for a Loan 

  1. Should a person be a guarantor? There are two sides to the question. Shlomo Hamelech warns several times against being a guarantor (Mishlei 11:15; 17:18; 20: 16-17 and other verses) and the Gemara also says that it is good to avoid it (Yabamos 109b). The Rambam writes that a talmid chochom does not become a guarantor. (Hilchos Dayos 5:13) The ShLA Hakodesh writes, “It is good for a person to be yielding when dealing with other people. Nevertheless, he should avoid being a guarantor, as Chazal instructed, “A person should always guard himself against becoming a guarantor.” Therefore I warn and command my children and students never to be a guarantor for anybody, for I, too, have been sworn by my parents not to be a guarantor and hereby command you with all the force of a command to avoid it.” But if a person refuses to be a guarantor, he deprives the needy person of the possibility of getting a loan. Indeed, it means that no one will lend out money. How can we resolve these warnings against being a guarantor with the necessity of making it possible for the poor to receive loans? The warning should be understood as cautioning us to take the matter of being a guarantor very seriously and not to sign as a guarantor simply because we want to help someone out without examining the matter very carefully. A person should realize that to sign as a guarantor is a serious thing, and that the lender will turn to the guarantor to collect the loan if the borrower doesn’t pay. A person who signs as a guarantee must be willing and able to repay the loan. If he’s not, he shouldn’t sign, no matter how reliable the borrower may seem to be. A guarantor must be certain that the person for whom he is signing is honest and straight in all business matters, for signing is a commitment to repay the loan if the borrower doesn’t come though. Unfortunately, there are many who have gotten into serious trouble by signing for anyone who asked.
  2. It is forbidden for the borrower to borrow with the intention of having the guarantor repay the loan. In any case, if the guarantor repays a loan, the borrower is obligated to reimburse the guarantor for the money he paid the lender if the following conditions are met: If the borrower asked the guarantor to guarantee his loan, if there are witness that the guarantor repaid the loan or a document in which the lender states that the guarantor repaid the loan to him, if there is a document which establishes the guarantor, and if the documentation of the loan is in the possession of the guarantor. The fact that the guarantor possesses that documentation is not itself sufficient proof that he repaid the loan. There must also be witnesses. The verse, “The wicked borrow and do not repay,” applies to a person who borrows without any intention of repaying either the borrower or the guarantor.
  3. Can the guarantor change his mind? if the loan has not yet been made, yes, even though a kinion was made. If the loan was made on the basis of the guarantor’s promise to guarantee the loan, but before he made a legal commitment, the lender cannot collect from the guarantor if the guarantor changes his mind and the borrower fails to pay back the loan. But if , at the time when the loan was made, the guarantor committed himself to guarantee the loan, he cannot back out. 
MDhalachalMaase is written by HaRav HaGaon R’ Shammai Gross
Translated by Rabbi Tzvi Abraham