blog.cat.money7 min read8/25/2026

You Signed a Guarantee and the Borrower Stopped Paying: When Will They Collect from You—and How Might the Debt Be Reduced?

Signing as a guarantor does not automatically make you the first address for the entire outstanding loan balance. The guarantor’s identity, the amount stated in the document, the notices sent, and the measures taken against the debtor may determine whether you will pay, when—and how much.

Numbers and facts

•90 days for notice of nonpayment
•15 days’ advance notice before acceleration
•Up to 4 percentage points above the original interest rate as default interest
•₪89,311.66—one of the protected-guarantor ceilings
•₪744,263.82—the ceiling for an eligible housing guarantee

First: What Type of Guarantor Are You?

The Guarantee Law, 5727–1967 distinguishes between an ordinary guarantor, an individual guarantor, and a protected guarantor. An individual guarantor is a private individual who guarantees a debt to a creditor whose business includes granting loans, but is not the debtor’s spouse or partner; when the debtor is a corporation, a person with an interest in it is also not an individual guarantor. An individual guarantor may be considered a protected guarantor if the stated guarantee amount does not exceed ₪89,311.66, or up to ₪744,263.82 when the debt was intended to purchase rights in a dwelling for the residence of the debtor, the debtor’s adult children, or the debtor’s parents. The classification is particularly important because a protected guarantor has broader protection against being approached prematurely.

Can You Be Required to Pay the Entire Debt?

An individual guarantor is liable only up to the fixed amount recorded in the guarantee agreement, together with the additions permitted by law; if no fixed amount was recorded, the guarantor is released from the guarantee. Possible additions include default interest, but its rate cannot exceed the original interest rate by more than four percentage points. Before signing, the creditor must disclose, among other things, the principal, interest, payment dates, indexation, number of guarantors, and each guarantor’s proportional share. A common mistake is to look only at the loan amount without checking the limited amount specified in the guarantee document and which additions were included in the demand.

When May the Creditor Approach the Guarantor?

A protected guarantor generally cannot be presented with a demand for payment before a judgment has been issued against the debtor and the Enforcement and Collection Registrar has confirmed that all reasonable enforcement proceedings have been taken against the debtor, including realization of security in a residential dwelling when such security exists. The law recognizes exceptions, including a situation in which the debtor is a corporation and a receivership order or liquidation order has been issued against it. The situation is different for a guarantor who is not protected, and bank guarantee documents may include a waiver of the requirement to approach the debtor first. Nevertheless, according to the material reviewed, as a rule, a bank should not demand payment from the guarantor without first or simultaneously demanding it from the debtor, except in special circumstances such as loss of contact or insolvency.

The Letters the Creditor Must Send

When the debtor fails to pay, the creditor must notify an individual guarantor by registered mail within 90 days of the date on which the debtor was required to pay. If the creditor seeks to accelerate a loan payable in installments because of arrears, the individual guarantor must be notified at least 15 days in advance; within 15 days, the guarantor may give notice that the guarantor wishes to continue repayment according to the original loan schedule. Case law has also addressed the duty to give notice of an extension granted to the debtor: in LCA 2443/98 Lieberman v. Israel Discount Bank Ltd., the guarantors were released from liability after the bank failed to notify them of the extension, thereby preventing them from protecting their interests. It is therefore not enough to check whether a final demand letter arrived—a timeline of the arrears, extensions, proceedings, and notices must be constructed.

How Breaches of Duties May Reduce the Demand

A delay in giving the 90-day notice does not automatically cancel the guarantee: the law releases the guarantor to the extent of the damage caused by the delay. In LCA 5047/08 Larisa Logak v. Bank Tefahot for Mortgages Ltd., it was emphasized that the guarantor must show which actions could have been taken to reduce the damage. By contrast, if the 15-day notice was not given before acceleration, an individual guarantor is not liable for the accelerated repayment. The absence of a fixed amount, failure to disclose certain details, misrepresentation, a fundamental change that impaired the guarantor’s rights, or an interest calculation exceeding what is permitted may also result in release or reduction, depending on the facts.

What the Court Examines in Practice

The examination does not end with the question of whether there is a signature at the bottom of the page. The court may examine what was explained before the signing, whether the guarantee related to a new debt or an existing debt, the amount stated, which notices were sent and to what address, and what the guarantor could have done if informed in time. In CA 1750/92 United Mizrahi Bank Ltd. v. Zvi Ziegler, a guarantor was released after being misled into believing that the guarantee concerned a new account, while in fact it concerned an existing account with a substantial debit balance. When there are several protected guarantors, the default is liability in equal shares, and a guarantor is not liable beyond the ceiling established in that guarantor’s agreement.

FAQ

The borrower stopped paying—can the bank sue me immediately?

Not always. If you are a protected guarantor, a judgment against the debtor and confirmation by the Enforcement and Collection Registrar that reasonable proceedings against the debtor have been exhausted are generally required first. For an individual guarantor who is not protected, the wording of the guarantee, including any waiver of prior recourse against the debtor, and the bank’s duties toward the guarantor must be examined.

I did not receive notice within 90 days—is the guarantee canceled?

Not automatically. Section 26 of the Guarantee Law releases an individual guarantor to the extent of the damage caused by the failure to give notice, so it is necessary to show what could have been done in time and how that would have reduced the debt. Documentation concerning assets the debtor had, collection possibilities, or measures that were not taken may be relevant.

Is a guarantor also liable for interest and arrears?

An individual guarantor may be liable for additions permitted by law, not only for the principal. Interest due to delay is limited to an addition not exceeding four percentage points above the original interest rate, and the indexation, expenses, and consistency with the stated guarantee amount must also be examined.

What happens if the guarantee agreement does not state an amount?

Under Section 21 of the Guarantee Law, an individual guarantor is released from the guarantee if the agreement does not state a fixed amount. If several documents or credit facilities are involved, their wording must be examined together rather than relying solely on the document’s title.

I paid in place of the borrower—can I demand reimbursement from the borrower?

A protected guarantor who has performed the guarantee, in whole or in part, may continue the collection proceedings initiated by the creditor against the debtor. The practical ability to recover payment still depends on the debtor’s circumstances and assets.

What to do next

Upon receiving a demand, immediately collect the loan and guarantee agreements, the debt breakdown, all notices and postal confirmations, and construct a timeline of the arrears and proceedings against the debtor. Check in particular your classification, the guarantee ceiling, the allocation of liability among the guarantors, and the interest calculation; if legal proceedings or an Enforcement and Collection file have already been opened, it is important to promptly determine the applicable deadlines.