Asked by: Isbel Apteasked in category: General Last Updated: 16th June, 2020
Why surety is a Favoured debtor?
Also to know is, what is the difference between a guarantor and a surety?
It means that the guarantor can be held liable only after the creditor has exhausted all the properties of the debtor before the debt can be attached and accounted to the guarantor. On the other hand, the surety is liable to pay the monetary obligation of the debtor if the latter refuse to pay his obligation.
Also, how do you get out of a surety? A surety can only be cancelled in writing with the permission of the creditor. If a bank is willing to cancel a surety, it will only do so if the debt is paid in full or if one surety can be replaced with another or if the remaining surety is financially in a good enough position to satisfy the bank's requirements.
Subsequently, one may also ask, what are the rights of surety against the creditor principal debtor and co sureties?
Rights of Surety against the Principal Debtor After the payment of the debt to the creditor, the surety is subrogated to the rights of the creditor i.e., he has the same rights as those of the creditors. Therefore, he can sue the principal debtor to exercise those rights.
Does the release by the creditor of one of the sureties discharge the others?
—A release by the creditor of one of the co-sureties does not discharge the others neither does it free the surety so released from his responsibility to the other sureties, (Section 138 Indian Contract Act).