Yes, it is possible that Amigo Loans could take court action against you, but it is worth keeping in mind that this is always a last resort. Amigo Loans, or any other kind of guarantor lender will tend to avoid going to court and sort things out amicably with regards to an affordable repayment schedule.
To clarify the situations where court action may be applicable, we have put together the guide below.
Who are Amigo Loans?
Amigo Loans is an FCA authorised guarantor lender and a firm enabling people with no credit or bad credit scores to obtain a loan. It is possible for customers to potentially borrow up to £10,000 in total.
These customers are able to borrow money by nominating a guarantor to back the loan. This person, usually a family member or friend, enters a legally binding contract agreeing to pay the loan off in the event the main applicant cannot pay it.
Why would Amigo Loans take you to court?
Amigo Loans, as with most guarantor lenders may take legal action if both the main borrower and guarantor fail to pay back, or refuse to pay the outstanding loan.
The guarantor refusing to pay, in this case, would be taken to court and may be issued with a County Court Judgement (CCJ).
What happens if the guarantor can’t pay?
If the guarantor is unable to make payments when requested, then a guarantor lender like Amigo Loans will start investigating why this has happened in the first place.
This is because such a scenario occuring should be highly unlikely. Most guarantor loans are only granted on the basis of the profile of the nominated guarantor.
The nominated guarantor usually has a strong credit score, is a homeowner and has a stable income. These affordability criteria are put in place by guarantor lenders in order to reduce the risk of either the main borrower or guarantor defaulting on payments at any point during the duration of the loan.
What if the guarantor refuses to pay?
If Amigo Loans has contacted the guarantor to pay the loan (which will only happen if the main borrower cannot pay) and they refuse to pay, court action is likely to be taken as it is breaking the terms of the contract.
This is why it is extremely important that the guarantor is fully aware of the potential pitfalls of being nominated as one. It is essential that the guarantor reads the terms of the contract before signing it, to ensure they understand what can happen if the main borrower does not pay. It is absolutely necessary to comprehend the responsibilities of a guarantor before signing any agreement.
What happens if Amigo Loans takes you to court?
If Amigo Loans, or any other kind of guarantor lender ends up taking court action, then they will likely try to obtain a CCJ.
If Amigo Loans is successful in obtaining this judgment, there are a few possible outcomes that could occur:
- They could apply for an attachment of earnings order. This means that they would have the legal right for your employer to pay them out of your salary.
- Issue a warrant of execution: meaning they can involve a bailiff to visit your property to recuperate the loan through assets you have.
- Apply for a property charging order. That means the lender would have the legal right to be paid when you sell your property if you are a homeowner.
