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[av_heading heading=’ABOVE THE LAW ‘ tag=’h3′ style=’blockquote modern-quote’ size=” subheading_active=’subheading_below’ subheading_size=’15’ padding=’10’ color=” custom_font=” av-medium-font-size-title=” av-small-font-size-title=” av-mini-font-size-title=” av-medium-font-size=” av-small-font-size=” av-mini-font-size=” admin_preview_bg=”]
BY AYIN DREAM D. APLASCA
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IT’S THAT TIME of the year again when almost all people around the world are joyous, when people expect gifts under the tree, sparkling lights by the windows, greeting cards in the mailbox, and sumptuous dinners with family and friends.
However, there are people who consider this time of the year as a time of sorrow. Why? They don’t have the extra money to buy presents and food for their loved ones. This time of the year may only be a wish.
Well, this is a sad reality. This makes them do what others usually do to survive this holiday season – apply for a cash loan. And by applying they become the principal debtor with co-makers.
I will be discussing this because the last case I accepted before the long weekend had something to do with this matter – being a co-maker. Because of attorney-client privilege I will be reserving the details of my communications with my client. Let me just discuss the role and liabilities of a loan co-maker.
A co-maker is a person who, by contract, promises to pay another person’s or the principal borrower’s loan if that person fails to do so.
Different lending institutions have different policies. A lending institution may require a co-maker if the principal borrower is unable to meet its credit criteria. A co-maker does not necessarily receive or benefit from the proceeds of the loan but is equally responsible for ensuring that the full amount of the loan, including interests and other charges, are paid.
When the principal borrower fails to pay, the lending institution does not need to proceed or collect first from the principal borrower and may immediately take it against the co-maker.
It may collect the full amount of the loan, including interests and other charges, from the co-maker, or sue the co-maker along with the principal borrower in an attempt to collect payment; and demand the payment of late fees or collection costs from the co-maker.
The remedy of a co-maker who is made to pay the loan and the interest thereon is to demand the principal debtor to reimburse whatever amount he was made to pay.
This is the time of the year that some of your friends might ask you to be a co-maker in a loan. When you agree to this, you accompany him or her to the lending institution and you are asked to sign a promissory note or a debt instrument which proves that you are a co-maker.
It is best that the principal debtor is someone you know and trust. And in whatever document you sign or whatever contract you enter into, it is best to ask for details and information to avoid stress and problems.
This is the time of the year to be more cautious not to overboard your wallets or credit cards. Be wiser to avoid financial worries.
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(Atty. Ayin Dream D. Aplasca practices her profession in Iloilo City. She may be reached thru ayindream.aplasca@gmail.com/PN)
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