17 December, 2007
IT may not be a nice thing to say, but Insolvency Department officers have this advice for everyone. Do not be a guarantor, even if it is for members of your own family. Bankrupt guarantors come in all shapes and sizes - from as young as 18 to as old as 70 - and the Insolvency Department has seen them all.
One young man became a bankrupt at the age of 18 - because he acted as guarantor for his father's loan. It took him many years to get out of bankruptcy.
"It happens quite often, though not always at such a young age," said Insolvency Department director of Bankruptcy Division Lailawati Husain.
"Sometimes, parents put their children as directors of their company. The children act as corporate guarantors for loans taken by the company. And then, the company folds."
Children, she says, are not the only corporate guarantor victims. Some retired civil servants are invited to be on the board of directors of a company and given fat salaries. In return, they have to be corporate guarantors for the company's loans.
When the company is unable to settle the loan, the retired civil servant is left holding the baby.
"Some of them say they are only the guarantor, or they are only members of the board. But we don't really look at the reason why they took out the loan. Once you have been declared a bankrupt, we have to administer you," said Lailawati.
Some women have also had to swallow the bitter pill of bearing the burden of their husband's failed ventures. "Wives act as guarantors for their husbands, or they provide property as security for their husband's loan.
"When the husband can't pay, the creditors go after the wife - or seize her property," said Lailawati.
Some women have had the misfortune of being made bankrupt after their husbands have moved on to other relationships, leaving their wives or ex-wives with literally nothing but debts.