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Chris The Lawyer
Chris The Lawyer, Lawyer
Category: New Zealand Law
Satisfied Customers: 22155
Experience:  37 years qualified as a lawyer; LLB, MMgt and FAMINZ.
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Insolvency question. 18 years ago I signed a bank joint guarantor

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Insolvency question. 18 years ago I signed a bank joint guarantor (two parties as shareholders -husband and wife) . The indemnity clause was crossed out and initialed. The business has now gone into insolvency. The bank is seeking recovery of the overdrawn business account as an unsecured creditor having now been advised it will not receive a disbursement from the voluntary liquidation. A 7th May letter from the bank refers to the account being overdrawn above the $1,000 limit of the particular account.

The question is; Does this letter now define the limit as $1000 and if so does this define the limit of the guarantor obligations.

christhelawyer : HiWelcome to JustAnswer. My first response will follow shortly. Please feel free to follow up if anything is not clear
christhelawyer : Under banking law, the guarantors are liable for all amounts unpaid, whether within the limit or in excess of this. The overdraft limit simply sets the amount beyond which the bank will refuse to honour any payments. But any amount in excess is still owed, and by the guarantors.


christhelawyer : Bank guarantees are carefully drawn to ensure all liabilities are guaranteed
christhelawyer : you may have more details which would clarify this of course, but that is the starting point

I have a problem with the field size and cannot read your answer , Wait a few minutes

christhelawyer : Sure

I am having trouble loading your answer. I am also need to attend a meeting for the next two hours . I will respond once I have been able to access your answer . Thank you Geoffrey

christhelawyer : I have changed the view which may help

ok ,thanks , I am using a tiny netbook right now instead of the normal sized machine so thats a factor also


I can see the answer and it is what I thought would be the case. I have several more questions and will make contact again on Monday.


Thanks again

Chris The Lawyer and other New Zealand Law Specialists are ready to help you
Great, talk then
Customer: replied 3 years ago.
Chris , I have more questions but I do not want the questions and answers to be in the public domain. What privacy provisions are there with your service.
Customer: replied 3 years ago.

Chris , I have more questions but before asking , can you clarify the privacy aspect. I do not want my Q&A to be in the public domain. Second query, I made the $30 deposit, I prefer to pay as we go and not sign to a monthly service. Do I still have credit and how do we organise this. Thanks Geoffrey

You can ask the questions to be removed from view after out discussions, but there is I am afraid a window when they will be visible until the moderator deletes access. I don't deal with the money side so you should [email protected] what account you have and what you want to do with payments. I only answer the questions
Customer: replied 3 years ago.

Chris, Thank you. I will talk to "experts@" and get back to you when I have my concerns sorted out. This most likely will not be until Monday. Are you always on line or do I need to book you.


I will prepare my next questions carefully as they concern payment or non payment options. I do have one general question now.


The guarantee contains a clause allowing the bank to assign any debt to successors so in the event of my death my children would become liable. Is this in line with NZ law principles, eg cannot be responsible for the sins of the fathers etc

, Geoffrey

That clause fortunately does not have that meaning. When the bank says successors, they mean successors to the bank, not to you, and there is no way your children are liable for the debts. It covers the situation when a bank is taken over, or assigns its assets like the debts. But it does not affect your children.
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