Can a guarantor claim against the debtor?

Question

José Manuel Alburquerque · Accepted Answer

Yes, a guarantor who pays on the debtor's behalf can claim back from the debtor everything they paid, with statutory interest from the time they notified the debtor of the payment and the expenses they have incurred since notifying the debtor that payment was being claimed from them. They also take the creditor's place to the extent of what they have paid, with the creditor's securities, such as a mortgage on a flat belonging to the debtor. It is advisable to notify the debtor in writing before paying, because otherwise the debtor will be able to raise against the guarantor the defences they would have had against the creditor. In Catalonia the guarantor in principle has ten years from payment to claim it. As a general rule, they will not be able to claim it if the debtor has had their debts written off in insolvency proceedings, what is known as the “segunda oportunidad”, the second-chance procedure. What the guarantor can claim The law gives a guarantor who pays the right to be compensated by the debtor, even if they gave the guarantee without the debtor knowing. That compensation covers: Everything they have paid towards the debt. Interest on that amount from the time they notified the debtor of the payment, even if the debt itself did not bear interest. This is the statutory interest rate, which is set by the State Budget Act. The expenses they have incurred after notifying the debtor that payment was being claimed from them. Damages, where there are any. If you reached an agreement with the creditor and paid less, you can only claim from the debtor what you actually paid. If you paid before the debt fell due, you cannot claim it until the due date. On paying, you also take the creditor's place, which is known as subrogation. You acquire the rights the creditor had against the debtor, including its securities, to the extent of what you have paid. The debtor often has no assets, which is why a guarantor was asked for. In that case, recovering the money can be difficult. If the debtor has a flat, the creditor's mortgage or an attachment may be the way. And if the debtor has been granted the second chance, as a general rule you will no longer be able to recover from them what you pay, because insolvency law extends the write-off to what the debtor owes you for that payment, to the same extent as the guaranteed debt. How to protect yourself Notify the debtor in writing when payment is claimed from you, before paying and as soon as you have paid. Interest runs from this last notice. If you pay without notifying them, the debtor will be able to raise against you the defences they had against the creditor, for example that they had already paid. And if the debtor, unaware, pays again, you will only be able to claim against the creditor. Keep proof of each payment. Ask the creditor for a certificate of what you have paid and, if you pay everything, a certificate that the debt has been settled. Even before paying, in some cases you can require the debtor to obtain your release from the guarantee or to give you security, for example if you have been sued for payment, if the debtor is insolvent or if the debt has already fallen due. The time limit and the other guarantors In Catalonia, the right to claim against the debtor is in principle subject to the general ten-year time limit of the “Código Civil de Cataluña”, the Catalan Civil Code, which starts when you pay. If you pay in stages, for example the loan instalments the debtor stops paying, each payment has its own date, so it is advisable to make written claims regularly. Under the Spanish Civil Code (“Código civil”), which applies in most of the rest of Spain, the general time limit is five years. Before suing the debtor, the law generally requires an attempt to reach an agreement, for example through a written proposal or mediation. If there are other guarantors of the same debt, the one who pays can claim from each of them the share that corresponds to them. If one of them cannot pay, their share is divided among the rest. The law sets out in detail when this claim can be made, so, if you are going to pay without having been sued, seek advice first on how this may affect you.