Personal Guarantee as Legal Protection as a Result of Debtor Default in Credit Agreements

Abstract

This study analysed the liability of personal guarantees and legal protection for personal guarantees due to debtor defaults in credit agreements. This normative legal research examined primary, secondary and tertiary legal materials. Legal materials were collected by document study and analysed normatively and prescriptively.
Forms of legal protection for personal guarantees include, such as the guarantor can ask for a return from the debtor in the condition of compensation for all losses that the guarantor may suffer as a result of non-fulfilment of obligations by the debtor; the guarantor only serves as a companion to the debtor, in the sense that as long as the debtor is current, there are no problems in the loan instalments until they are paid off. There are efforts to save credit or credit restructuring before the execution of particular collateral objects belonging to the debtor or collateral belonging to personal guarantees.
The bank, as the creditor, should provide an understanding to the prospective guarantor about his function and position as a guarantor to avoid the risk of loss on the part of the guarantor. The debtor should determine if the guarantor is adequate in finances and understands his position as a guarantor. The guarantor should have good faith in helping the debtor in the event of default so that the implementation of the credit agreement can run smoothly until the credit is repaid so that, in the future, it can carry out all responsibilities to the fullest. Further, in the personal guarantee agreement, it is best if the heirs of the personal guarantee are notified in advance when the deal takes place to avoid inheritance disputes.