Guaranteeing Someone Else’s Debts
GUARANTOR SURVEY
This questionnaire is designed to get an idea of what happened to you when you guaranteed someone else’s debt (as a guarantor), or became fully responsible for a debt that you shared with someone else (for example, as a co-borrower or joint credit card holder).
This information is for research and statistical purposes only. All your answers will remain strictly confidential.
NSW Law Reform Commission
University of Sydney
AUGUST 2001
UNDERSTANDING THIS SURVEY
All moneys mortgage refers to a guarantee or mortgage agreement which applies to an original amount and to all future debts between the borrower and the lender.
Co-borrower or joint borrower is a person who has borrowed money with another person and is legally responsible to pay the whole debt.
Cooling off period refers to a short period of time after an agreement has been made during which one or both parties can decide to not go ahead with the agreement.
Independent advice is advice received from someone who is not involved or has no interest in the matter for which they are providing advice.
What does guaranteeing someone else’s debts mean?
If you have guaranteed someone else’s debt it means you have agreed to repay the whole of the other person’s debt if that person does not pay.
What is the difference between a business loan and a personal loan?
A personal loan is generally for an item like a car, boat, housing mortgage or furniture. It is not connected to any business or commercial activity. A business loan is a loan connected to a business, eg equipment for a business or extra money to help run or setup a business.
HOW TO CONTACT US
If you need assistance answering this survey, please contact us.
NSW LAW REFORM COMMISSION
STREET ADDRESS Level 17, 8-12 Chifley Square, Sydney
POSTAL ADDRESSES GPO Box 5199, Sydney NSW 1044 or DX 1227, Sydney
TELEPHONES VOICE (02) 9228 8230 or TTY (02) 9228 7676 or FAX (02) 9228 8225
EMAIL nsw_lrc@agd.nsw.gov.au
INTERNET www.lawlink.nsw.gov.au/lrc
WOULD YOU LIKE TO PARTICIPATE AGAIN?
If you would be willing to take part in a more detailed, strictly CONFIDENTIAL discussion about your experience, please write down your contact details here:
FIRST NAME _________________________________________________________
ADDRESS ___________________________________________________________
EMAIL ADDRESS _______________________________________________________
AND/OR TELEPHONE NUMBER _______________________________________________
A. INTRODUCTION
1. Which country were you born in?
1 o Australia
2 o Other PLEASE SPECIFY _____________________________________________
2. (a) Is English your first language?
1 o Yes
2 o No
(b) Would you say your ability to speak English is:
1 o Weak
2 o Fair
3 o Good
4 o Very good
(c) Would you say your ability to read English is:
1 o Weak
2 o Fair
3 o Good
4 o Very good
3. Which one of these age groups are you in?
1 o Under 30 years
2 o 30-39 years
3 o 40-49 years
4 o 50-59 years
5 o 60 years or over
4. Which one of these best describes your highest level of education?
1 o No schooling
2 o Primary school
3 o Some secondary school
4 o Completed secondary school
5 o Technical or trade qualification
6 o University
7 o Other PLEASE SPECIFY _____________________________________________
5. Your gender?
1 o Male
2 o Female
6. Your postcode?
PLEASE SPECIFY _______________________________________________________
B. THE TRANSACTION THAT CAUSED YOU PROBLEMS
7. Thinking of the loan that you guaranteed for another person, or the debt that you became responsible for, which ONE of the following best describes what that situation was?
1 o You guaranteed a business loan for somebody else (eg equipment for the business or money to help run the business)
2 o You guaranteed a personal loan for somebody else (eg to help them buy a car or furniture etc)
3 o You jointly took out a business loan with another person (ie as a co-borrower)
4 o You jointly took out a personal loan with another person
5 o You got a joint credit card with another person
6 o Not sure/can’t remember
7 o Some other situation PLEASE SPECIFY _________________________________
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8. (a) Was that loan for a set amount, or an indefinite or unlimited amount?
1 o Set amount
2 o Indefinite or unlimited GO TO QUESTION 9
3 o Not sure/can’t remember GO TO QUESTION 9
(b) If set amount, roughly how much was the loan for?
1 o Less than $10,000
2 o Between $10,001 and $20,000
3 o Between $20,001 and $50,000
4 o Between $50,001 and $100,000
5 o Between $100,001 and $200,000
6 o Over $200,000
7 o Not sure/can’t remember
9. What year was that loan or credit card taken out? PLEASE SPECIFY ___________
10. (a) Who was the other person whose loan you guaranteed (or the other person with whom you took out the loan or credit card)?
1 o Your husband/wife or partner
2 o Your son
3 o Your daughter
4 o Your parent(s) or grandparent(s)
5 o Your brother/sister
6 o Some other relative
7 o A friend
8 o A business associate
9 o Someone else PLEASE SPECIFY _______________________________________
10. (b) At that time, about how long had you known that person?
PLEASE SPECIFY _____________________YEARS
11. Who made that loan or issued that credit card?
1 o A bank
2 o A credit union
3 o Some other finance institution
4 o A shop or other sales outlet
5 o An individual person
6 o Other PLEASE SPECIFY _____________________________________________
7 o Not sure/can’t remember
12. Whose idea was it to enter into this arrangement?
1 o My idea
2 o The other person’s idea
3 o Both of us
4 o The lender
5 o Somebody else PLEASE SPECIFY ______________________________________
6 o Not sure/can’t remember
13. How would you describe your own financial situation at that time, was it:
1 o Very weak
2 o Fairly weak
3 o Fairly strong
4 o Very strong
14. At that time, were the following statements true or not true for you? (tick one number on each line)
(a) The other person pressured me into making that arrangement (eg the guarantee, joint loan or credit card)
1 o TRUE
2 o NOT TRUE
3 o NOT SURE/CAN’T REMEMBER
(b) I felt that I understood pretty well what I was doing
1 o TRUE
2 o NOT TRUE
3 o NOT SURE/CAN’T REMEMBER
(c) I was nervous or worried about this arrangement from the start
1 o TRUE
2 o NOT TRUE
3 o NOT SURE/CAN’T REMEMBER
(d) I had previously made other arrangements or commitments similar to this one
1 o TRUE
2 o NOT TRUE
3 o NOT SURE/CAN’T REMEMBER
(e) I thought that at the worst I would have to help the other person pay back their debts
1 o TRUE
2 o NOT TRUE
3 o NOT SURE/CAN’T REMEMBER
(f) I felt I had a good understanding of the other person’s financial situation (eg that person’s business or assets)
1 o TRUE
2 o NOT TRUE
3 o NOT SURE/CAN’T REMEMBER
(g) I thought it was maybe a silly thing to do but I did it anyway
1 o TRUE
2 o NOT TRUE
3 o NOT SURE/CAN’T REMEMBER
(h) I could not read, or could not understand, the documents that I signed
1 o TRUE
2 o NOT TRUE
3 o NOT SURE/CAN’T REMEMBER
15. And looking back from the present time, are the following statements true or not true for you? (tick one number on each line)
(a) More written information about the loan/guarantee/credit arrangement would have helped me a lot
1 o TRUE
2 o NOT TRUE
3 o NOT SURE/CAN’T REMEMBER
4 o NOT RELEVANT IN MY CASE
(b) More written information about the other person’s financial situation would have helped me a lot
1 o TRUE
2 o NOT TRUE
3 o NOT SURE/CAN’T REMEMBER
4 o NOT RELEVANT IN MY CASE
(c) A ‘cooling off’ period before I signed up would have helped me
1 o TRUE
2 o NOT TRUE
3 o NOT SURE/CAN’T REMEMBER
4 o NOT RELEVANT IN MY CASE
(d) I may not have signed if the lender had explained why my signature was required
1 o TRUE
2 o NOT TRUE
3 o NOT SURE/CAN’T REMEMBER
4 o NOT RELEVANT IN MY CASE
(e) No matter how much information I had then, I would still have gone ahead with the arrangement
1 o TRUE
2 o NOT TRUE
3 o NOT SURE/CAN’T REMEMBER
4 o NOT RELEVANT IN MY CASE
(f) A simple spoken explanation of what my obligations were would have helped me
1 o TRUE
2 o NOT TRUE
3 o NOT SURE/CAN’T REMEMBER
4 o NOT RELEVANT IN MY CASE
(g) What happened was just bad luck that could have happened to anybody
1 o TRUE
2 o NOT TRUE
3 o NOT SURE/CAN’T REMEMBER
4 o NOT RELEVANT IN MY CASE
(h) It turned out that the other person’s financial situation was very different from what I thought then
1 o TRUE
2 o NOT TRUE
3 o NOT SURE/CAN’T REMEMBER
4 o NOT RELEVANT IN MY CASE
16. Did anyone suggest that you should get independent advice about this loan or credit card arrangement before you signed the documents (that is, advice from the lender or a friend)?
1 o Yes PLEASE SPECIFY _______________________________________________
2 o No
3 o Not sure/can’t remember
17. Did you in fact get any independent advice before you signed?
1 o Yes
2 o No GO TO QUESTION 19
3 o Not sure/can’t remember GO TO QUESTION 19
18. If you did receive independent advice please answer the following:
(a) Who did you get independent advice from? (tick each number that applies)
1 o The other person’s lawyer
2 o A lawyer not connected with the other person or with the lender
3 o A financial counsellor not connected with the other person or the lender
4 o Somebody else PLEASE SPECIFY ______________________________________
(b) Was that independent advice in writing?
1 o Yes
2 o No
3 o Not sure/can’t remember
(c) About how long did you have to consider that advice before you signed?
1 o Very little time, I had to sign the same day
2 o One or two days
3 o Between 2 days and a week
4 o More than a week
5 o Not sure/can’t remember
(d) Was that independent advice clear and easy to understand?
1 o Yes
2 o No
3 o Not sure/can’t remember
(e) Did that advice encourage you to go ahead?
1 o Yes
2 o No
3 o Not sure/can’t remember
(f) Did that advice make you worried or concerned?
1 o Yes
2 o No
3 o Not sure/can’t remember
(g) Can you remember any particular information or advice that you received in this way? PLEASE SPECIFY ___________________________________________
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19. Here is a list of possible reasons why you might have signed up for this guarantee or loan. Please tick the number for each reason that was true for you (you may tick more than one answer):
1 o (a) I was embarrassed to say “no” or to ask too many questions
2 o (b) I thought it was a good business proposition
3 o (c) I thought it would be for the family’s financial benefit
4 o (d) I trusted the other person
5 o (e) I thought I was just witnessing the other person’s signature
6 o (f) I didn’t know it was a guarantee, I thought it was something else
7 o (g) I didn’t think I had any choice
8 o (h) I did not want to risk or damage my relationship with the other person
9 o (i) We were partners and it seemed right to share everything
10 o (j) I didn’t know I was taking any serious risk
11 o (k) The other person made all the financial decisions, I just did what I was told
12 o (l) I was putting my home at risk and I didn’t know it
13 o (m) I was scared not to sign
14 o (n) I knew it was a risk but I did it anyway
15 o (o) Apart from the reasons you have ticked above, was there some other reason you decided to sign? PLEASE SPECIFY ___________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
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20. (a) Where did you sign the documents?
1 o At home
2 o At the lender’s offices (eg the bank)
3 o At the seller’s premises (eg shop, car-yard etc)
4 o Other PLEASE SPECIFY _____________________________________________
5 o Not sure/can’t remember
(b) Who were you with when you signed?
1 o The other person?
2 o Another friend or relative?
3 o The lender or people representing the lender
4 o Somebody else PLEASE SPECIFY ______________________________________
5 o Not sure/can’t remember
21. Around the time that you signed, did the lender give you any of the following? (tick each number that applies)
1 o A copy of your contract
2 o A copy of the other person’s loan contract
3 o A written explanation of your rights and obligations
4 o A spoken explanation of your rights and obligations
5 o Information about the other person’s financial situation
6 o An indication (in dollars) of the maximum amount you might have to pay
7 o Not sure/can’t remember
22. At the time you signed how many children, if any, did you have who were aged 18 or under? PLEASE SPECIFY ______________________________________
C. WHAT HAPPENED LATER
23. About what year or how long after, did you first find out that there was a problem with repayment of the loan or the credit card debt?
PLEASE SPECIFY _______________________________________________________
24. (a) What has happened about the debt since then? (tick each number that applies)
1 o I paid the money back in full
2 o By agreement with the lender, I paid back part of the money
3 o I went bankrupt
4 o I still owe money to the lender
5 o I am still disputing the debt
6 o Other PLEASE SPECIFY _____________________________________________
_________________________________________________________________
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(b) Was your family home sold to pay the debt?
1 o Yes
2 o No
25. During the period of the loan, did the lender give you any of the following: (please tick one number on each line)
(a) Information about whether the other person was keeping up with repayments
1 o YES
2 o NO
3 o NOT SURE/CAN’T REMEMBER
(b) Information about any increase in the amount guaranteed
1 o YES
2 o NO
3 o NOT SURE/CAN’T REMEMBER
(c) Other information PLEASE SPECIFY___________________________________
_____________________________________________________________
26. When you found out about the problem with the debt, were any of the following things true or not true for you? (please tick one number on each line)
(a) The debt was for a lot more than I thought
1 o TRUE
2 o NOT TRUE
3 o NOT SURE/CAN’T REMEMBER
(b) It all came as a big shock to me
1 o TRUE
2 o NOT TRUE
3 o NOT SURE/CAN’T REMEMBER
(c) There was an all-moneys mortgage on my home that I did not know about
1 o TRUE
2 o NOT TRUE
3 o NOT SURE/CAN’T REMEMBER
27. Did you get help or advice regarding the debt from any of the following? (tick each number that applies)
1 o A Community Legal Centre
2 o A financial counselling organisation
3 o A private lawyer
4 o Legal Aid Commission
5 o The Australian Banking Industry Ombudsman
6 o Government body (eg Fair Trading Department)
7 o Other PLEASE SPECIFY _____________________________________________
28. Has your relationship with the other person changed much as a result of the debt or problems relating to it?
1 o Yes IN WHAT WAY? _______________________________________________
2 o No
3 o Not sure
29. Are there any other comments you would like to make about these matters, how they happened or how they could have been avoided?
_________________________________________________________________
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If this was a business loan, please answer Questions 30-40.
If it was not a business loan, that is the end of the questionnaire.
Many thanks for your help.
If you would be willing to take part in a more detailed, strictly CONFIDENTIAL discussion about your experience, please fill in your contact details on page 2.
D. GUARANTORS OF BUSINESS LOANS
30. Why did the other person want to borrow this money?
1 o To start a new business
2 o To expand or develop an existing business
3 o To help get the business through a difficult time
4 o To pay back another loan or loans
5 o Other PLEASE SPECIFY _____________________________________________
6 o Not sure/can’t remember
31. What role did you have in the business?
1 o Director (active)
2 o Director (silent)
3 o I’d help out with the business, but no formal role
4 o No role
5 o Other PLEASE SPECIFY _____________________________________________
32. What did you put up as security for the loan?
1 o A house or home unit etc
2 o A car
3 o Personal guarantee
4 o Other PLEASE SPECIFY _____________________________________________
33. Did anybody else guarantee the loan, or only you?
1 o Only me
2 o One other person
3 o More than one other person
4 o Not sure/can’t remember
34. At the time this money was borrowed, how much knowledge did you have about the financial situation of the relevant business?
1 o Quite a lot of knowledge
2 o Some knowledge
3 o Little or no knowledge
4 o Not sure/can’t remember
35. And at that time, how much knowledge did you have about the financial situation of the person who borrowed the money?
1 o Quite a lot of knowledge
2 o Some knowledge
3 o Little or no knowledge
4 o Not sure/can’t remember
36. Had you ever signed as a guarantor before?
1 o Yes
2 o No
3 o Not sure/can’t remember
37. Did you know at the time how much you might have to pay if the borrower could not make all the repayments?
1 o Yes
2 o No
3 o Not sure/can’t remember
38. Did you feel at the time that you had enough money to pay if you had to?
1 o Yes
2 o No
3 o Not sure/can’t remember
39. At that time, how likely did you think it was that you would have to pay out money because of the guarantee you gave?
1 o Quite likely
2 o Possible, but not very likely
3 o Very unlikely, not likely at all
4 o Not sure/can’t remember
40. Did the lender make enquiries about whether you would be able to repay the loan if necessary?
1 o Yes
2 o No
3 o Not sure/can’t remember
That is the end of the questionnaire.
Many thanks for your help.
If you would be willing to take part in a more detailed, strictly CONFIDENTIAL discussion about your experience, please fill in your contact details on page 2.
