ARE YOU A CO-MAKER?
REMINDER TO THE PUBLIC
Consider the following when signing as a co-maker:
A co-maker is a person who, by contract, promises to pay another person’s (principal borrower) loan if that person fails to do so.
- Is a co-maker required in all transactions?
Different lending institutions (lenders) have different policies. A lender 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, is paid.
- When the principal borrower fails to pay the loan, is the co-maker required to pay it?
Yes, the lender does not need to proceed or collect first from the principal borrower and may immediately take the following actions against the co-maker if the principal borrower is unable to pay:
• 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
- What is the remedy of a co-maker who is made to pay the loan and the interest thereon?
The co-maker can demand the principal debtor to reimburse whatever amount he was made to pay.
For further clarification, please contact:
Financial Consumer Affairs Group
Supervision and Examination Sector, BANGKO SENTRAL NG PILIPINAS
A. Mabini St., Malate, Manila 1004
E-mail: email@example.com I Tel. No.: 708-7701 local 2584