Bank loans are taken for different purposes. In case of taking a loan, the bank or financial institution has to take the responsibility of one or more persons or institutions as collateral or guarantor as collateral against the loan. But in most cases, it is seen that many people sign the loan agreement without reading or understanding the loan agreement. Later, when he himself got into a default case with the borrower, he lost his way. Because, in case of default, the liability also falls on the guarantor for the repayment of the loan and for that the guarantor also becomes the defaulter. Even if the borrower is not able to pay the arrears, the guarantor has to sell the property up to his own. Even if the borrower dies, the guarantor does not always get relief. In such a situation the loan account of the borrower is frozen. Basically, the guarantor has the responsibility to settle the arrears.
Therefore, in case of default, there is a provision in the existing financial court law to sue not only the borrower but also the guarantor for recovery of the loan.
The matter is being discussed in the provisions of Section 6 (5) of the Finance Court Act. That is, "the financial institution will side with the principal debtor when filing a lawsuit against the third party mortgagor or third party guarantor if they are involved in the loan; and the judgment, order given by the court. Or the decree shall apply jointly and severally against all the defendants and the case for issuance of decree shall be conducted simultaneously against all the defendants-provided that the court must first The property of the third party mortgagor and third party guarantor will then attract as much as possible, which means that the lending institution will first catch the original borrower, if it is not possible to recover the money from him or her. In case of non-adjustment of loan even in the auction of mortgage property, the third party Imortgagor and the third party guarantor will be caught. In simple words, each bank ( Bank) - Financial institution ensures repayment of the loan. They want a guarantor before giving that loan. In case of non-repayment of the loan, the bank also has the power to declare the guarantor as defaulter and can take legal action against the guarantor by filing a case.
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