Category: Surety

Guarantors and Unwise Financial Positions - Proverbs 22:26-27

8/9/2012

Do not be among those who give pledges, Among those who become guarantors for debts. If you have nothing with which to pay, Why should he take your bed from under you? Proverbs 22:26-27

Here is a proverb dealing with debt. And the debt spoken of here is actually not your own debt - but signing to assume the debt of others. Here it is called giving a pledge or becoming a guarantor for another debt. This is something the Scriptures are against in every situation. We are told numerous times to not become a guarantor for another person's debt. The reason for this is simple - when we do we put everything we have at risk.

The way that this is brought home to us by Solomon is to state what happens when the debt is no longer paid by the one we vouched for when we signed on as a guarantor. If they do not pay the debt - or make the payment - guess where they are coming to "legally" get their money? You got it - they are coming for you. And they have a legal right to whatever they have to take in order to pay that debt. In extreme situations this could even involve losing your home.

Why should he take your bed from under you? That is the question that is asked here - and it is the fact of your guarantor-ship. No matter what it costs, the people who hold the loan that you guaranteed will be able to take it from you. What is presented here is a worst case scenario. Here the banker comes and takes even the bed you are lying on from under you. In our society, where finance has been perverted by socialism and a government that attempts to have a system where no one fails, we think this is heartless and wrong. But the fact is that the person who co-signed for the loan did so under no durress and under no threat of force. They did a very stupid thing in guaranteeing another person's debts. Therefore when that person does not follow through - legally and completely in the moral right - the person who holds the loan has every right to recover their money. This is the case whether they get it from the person who took out the loan - or the unwise one who co-signed it.

Whether we realize it or not - we are being co-opted into co-signing for the foolishness of our government in this current age of socialistic decision making. Every time our government decides to go further into a debt that they cannot pay - giving away money that they do not have - we the people are on the hook for what they are doing. As I said, they are co-opting us into defacto guarantor status for the public debt. They do so through the tax structure that will be imposed to pay for the piper one day. They also do so through the way the Fed is allowed to print money with nothing other than the future collective worth of our nation to back it.

I need to say something that will sound like prophecy - and yet it really is not. There is coming a day, soon, where we will have to pay for the foolishness of our legislators (and this sin is rampant in both parties). When that day comes we will suddenly realize that by being co-opted into being a guarantor for the public debt - we are going to have the very bed we sleep on taken out from under us. This is not so much a prophecy as it is a principle of Scripture. We've ingored this princple for too long not to pay the price for it in the end. Sixteen trillion dollars for which we are guarantor is no longer something we can ignore. Unfortunately the day is fast approaching - we need to prepare for it and be ready for the day of our financial reckoning. God have mercy on our souls - and on our nation.

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Advice for the "Guarantor." Proverbs 11:15

10/26/2011

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He who is guarantor for a stranger will surely suffer for it, But he who hates being a guarantor is secure. Proverbs 11:15

There are at least six different times when Proverbs warns us against being either an guarantor or against surety. Here we are warned against being a guarantor for a stranger. The warning we are given by Solomon (and by the Lord) is that we will surely suffer harm for such an action.

When you guarantee another's debt - you are responsible for their action or their inaction. If they pay their debt on time, you will have no problem. If they do not - then you have to pay their debt. The reality though is that a person who has to ask for a guarantor is usually someone that a bank or a business considers a higher risk. We should learn from their concern that we too, should be concerned as well. This is why so many who become a guarantor regret it dearly. The high risk the bank is unwilling to take - becomes the risk of the guarantor. It is no shock to learn then that more often than not - the guarantor pays the money in the end.

But what do you say to someone who comes to you asking for surety - or for you to be their guarantor. First, you graciously decline citing your desire to be their friend longer than the terms on the loan you are being asked to sign. When you become a guarantor your relationship with that person changes. It changes either for the length of the loan or, in the case of those who default on the loan, possibly forever. Your friend may not like hearing this at first - but they will appreciate that you view a friendship as more important than a loan. Second, you graciously decline citing Scripture. You explain that your refusal to become a guarantor is being done because you want to obey God. In this case their frustration will be with God more than you. Third, you can encourage them lovingly that desiring something they cannot afford is eventually going to be harmful to them. Those who take this path consistently pay a much higher price in the years to come. It is better to control our desires, and keep them within the means that God has given to us. We may not get whatever we want when we want it - but - honestly, has that ever worked out well for anyone?

The Scriptures counsel us to be those who "hate" being a guarantor. The reason God tells us this is not to make us stingey. He says it for our protection, for the protection of the friend or family member who asks, and for the protection of relationships we want to keep far into the future - so we can be of long-term encouragement and blessing to those we love.

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Strong Consequences for Guaranteeing Other's Debt - Proverbs 20:16

6/10/2011

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Take his garment when he becomes surety for a stranger; And for foreigners, hold him in pledge. Proverbs 20:16

It is probably a little shocking to us in the West how often the Word of God talks about the issue of surety. We are not used to such strong words regarding debt and regarding guaranteeing the debt of others. But then again this shouldn't be too shocking because as a nation we are a debt loving people. We have over 14 trillion dollars in government debt and are one of the worst debtor nations in the world. The people of the United States are not much better having become one of the richest nations in the world - but deceptively - on the basis of debt rather than real wealth.

It might be wise for us to learn from the Scriptures on this matter because God warns in Isaiah about those who become rich with loans. This kind of wealth is not wealth at all. First of all you don't own anything when you "own" it with debt - the bank owns it. If you want to test this theory try missing payments on your "so-called" wealth - and find out how quickly the bank will eventually come and prove who owns what. Second, when you become wealthy with debt - you are paying much more for what you are buying than what it is worth. I remember when my family went to sign for our house loan. I was horrified when I saw that I was paying close to triple what the house actually cost to buy it with a loan. That was an eye-opening experience for me.

The problem with going surety for someone else is that you are in effect giving a guarantee that you will pay their debt if they do not. To counter this our society has something called collateral, which is something of value that is put up to secure the debt. When you have collateral you don't have surety - because if the person defaults on their debt, you can take the collateral to pay for what they do not pay. Good collateral is when you have something close to equal in value to what is borrowed. Here in this proverb though, we have a situation where someone does not have sufficient collateral for their loan - and therefore all they have is their garment. God's Word forbids taking a man's "cloak" overnight because for the poor this was all they wrapped themselves in to protect from the cold. Yet what we see here is that we are told that when a man becomes surety for a stranger - to even take his garment - and when he does this for a foreigner - to hold him in pledge for what he has foolishly guaranteed. The teaching here is that there has to be a price for foolishness - and especially foolishness with money. But there is a more sinister possibility here that we need to examine.

Several commentators see this word "stranger" as a sign that this loan was also given because of an involvement with an alluring woman. If you remember elsewhere in the book of Proverbs, the prostitute is often called a "strange woman." There is a warning then here given especially to men who deal with money. That warning is not to be pulled into giving money because we are taken by a woman's alluring appeal. We all know of the scenes where a woman uses her sexual appeal to get what she wants. This statement is possibly given to warn men to steel their hearts when an attractive woman comes for an appeal. We are to loan money on the basis of wisdom - not in response to our glands and egos.

God gives to each of us a provision - and that provision is meant to be used according to the wisdom that He has given in His Word. We MUST be careful to follow biblical financial principles. When we vary from them we will face loss and face difficult times because we did not listen to His wisdom or follow it. We need to realize how often the book of Proverbs offers to us God's take on financial matters - and follow His wisdom to the place of His blessing and protection. If we do not, we may lose our shirt - or at least our garment.

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Unwise Financial Actions - Proverbs 17:18

6/5/2011

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A man lacking in sense pledges And becomes guarantor in the presence of his neighbor. Proverbs 17:18

One of the most unwise decisions that you can make is to guarantee the loans or the actions of someone else. We see in this proverb that the foolish man who lacks any sense will shake hands (that is what pledges means here) and will become a guarantor for another. The idea here is not, as some state, that we should refuse to make promises or shake hands at the close of a deal. The idea here is the kind of deal that is being made - and the foolishness of thinking that we can control another man's actions.

Recently our nation has had a dose of what this brings. Our congressional leaders wanted the votes provided by expanding home ownership to more people. They did this by strong-arming bankers to begin giving loans to people who by all financial indications could not pay them back in the future. The banks, knowing that the government could make their lives miserable, did just that. Things looked great for a season as money was loaned and building projects went through the ceiling. But there was going to be a price to pay later that was completely ignored. That price came due when those who could not handle the amount of money that was loaned began defaulting on their loans. That is the danger of becoming a "guarantor" in business dealings. This was even more dangerous since the guarantor was not allowed to do "due diligence" any longer by congressmen who arguably had never had to run a business. The end was that an avalanche of loans defaulted - and guess who was left holding the bill? Well, if you don't know, it was you and I - or at least our tax bill when our elected leaders eventually hand it to us.

All this could have been avoided if we would only follow the wisdom of Scripture. Of course that ship has already been sunken by our leaders who say that such talk is a breach of separation of church and state. The problem is that first, such a separation is not in our constitution - and second, God's principles are only ignored by those who will find them true to their great detriment when . . . when the bill comes due.

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When Sin Requires Consequence - Proverbs 27:13

12/27/2010

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Take his garment when he becomes surety for a stranger; And for an adulterous woman hold him in pledge. Proverbs 27:13

There are just plain dumb decisions that are made in life. At times when we make these stupid decisions, God in His mercy will deliver us from the consequences. If this happens, do not think God approves your actions - He is just showing amazing mercy to you in the midst of them. But there are some decisions God decides to allow us to face - with the full measure of the consequences being given to us. This proverb tells us about two of them.

The first has to do with a man acting foolish financially. When someone becomes surety for a stranger, that is a very foolish thing to do. This proverb tells us to even take a man's garment when this happens. Just as a reminder, surety is when we co-sign a loan - or guarantee another person's debt. If they default on the loan - we are on the hook for what they owe. The reason this is so foolish here is because someone is doing this for a stranger. He doesn't know the man - and is not related to him. He is just guaranteeing a loan for someone he does not know. He does not have a clue as to his character or his integrity - he just lays down his money to guarantee this man's borrowing. Surety is discouraged for anyone - but this should be a no-brainer when it comes to a stranger. With a family member of friend, we at least have a sense of their character and whether they will be likely to repay the loan. But a stranger - we know nothing about him. Thus, Solomon tells us to take this man's clothes when the loan defaults. This is something that hopefully will teach him a lesson about guaranteeing the loans of others - especially those he does not even know.

The second scenario is when a man hires a prostitute for sex - and offers her a pledge as payment. Adultery is a very foolish sin - but to offer someone our name as pledge is really foolish to another level. Amazing as it may seem, this is what Judah did when he hired his daughter-in-law Tamar as a prostitute. Tamar was not being a harlot. She was simply desiring that Judah's family line fulfill their duty in raising up sons for the deceased. When Judah did not have the money in hand to pay her - she asked for his seal and his cords. These were things by which a man could be known if they were seen. This was not wise for him - but it gave her the proof she needed when her adulterous father-in-law wanted to have her stoned for playing the harlot. When Judah saw his own seal and cords, he was humiliated and withdrew his call for her death.

No one wants to be humiliated by their sin. But there are times when it is a far better thing to be humiliated and learn than to escape humiliation and continue in sin. God is amazing how He delivers us from sin and from the world around us. May God give us grace to embrace that deliverance - and truly be wise.

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The Incredible Danger of Assuring Someone Elses Debt - Proverbs 6:3-5

6/6/2010

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Do this then, my son, and deliver yourself; Since you have come into the hand of your neighbor, Go, humble yourself, and importune your neighbor. Give no sleep to your eyes, Nor slumber to your eyelids; Deliver yourself like a gazelle from the hunter's hand And like a bird from the hand of the fowler. Proverbs 6:3-5

Evidently the Bible's view of being surety for someone else is pretty serious stuff. When you read these three verses, you get the idea that surety is something horrific that we need to avoid at all costs. If we have done it - the counsel here is to do whatever we need to do to get out of that situation. Why is this so serious an issue to God?

First of all surety means that you have guaranteed the debt of another person. When you do this, you are doin it at the peril of your own possessions. Most often a person does not seek surety unless they are not able to get normal credit. The only way they can get money is for someone else to guarantee that it will be repaid. Therefore you have a difficult situation that you face. First of all the person you have just guaranteed is not that solvent. They may NOT be able to repay their debt. If that is the case, then the bank, company, or individual who gave the loan has the ability to come after you. You have guaranteed that someone else will be responsible - and have done so at the risk of your good name - not to mention your goods themselves. No repayment - they come after your stuff - and have every right to it.

The second problem with surety is that it does not encourage responsiblity in the one who got the loan in the first place. It's not as if he or his reputation is really on the line. If he goes bankrupt its no big deal. There is a person behind him who has deeper pockets who will take care of things. Thus, the person doesn't even have all that much reason to be responsible and show good character in the process. Thus you are placing your good name and your "responsibility" in the hands of someone else. This is not a wise thing to do. The Bible's counsel is to not be willing to be surety for anyone!

What is the counsel here for when you find yourself having made the unwise decision to be surety for someone else? When you find that you've made the bad decision to be surety for someone else - the Bible tells you to deliver yourself from that situation. This word is a strong one - because it speaks of being delivered from the power of someone else. It has the idea of someone having much power over you - and is used with things like being in the power of an enemy - or even death. Surety places us in the power of someone else. They now have power over our reputation and our good name. God's counsel is to get out of that situation as soon as you can!

Solomon tells us that we've come into the hand of our neighbor in this situation. Hand here means the palm of their hand. It has the picture of being at the mercy of someone else - being in their absolute power. Again the picture given to us is of being at the mercy of another. The result of this precarious situation is that you need to do two things. First, go humble yourself before your neighbor. You've made a serious mistake, and you need to go in humility to admit your mistake. This may hurt - but you really don't want someone else responsible for your financial reputation and your financial well-being. This is serious enough that you also need to importune your neighbor to deal with this. Importune has the idea of going to them and doing whatever needs to be done to get out of this situation. Let them know that you cannot remain in this situation. We honestly need to see this as God does. Many people see no harm in being surety - and yet God tells us that this is a very unwise situaiton. It is one thing to invest - another to give a loan that needs to be repaid - even another to just give someone money they need. But here we are placing our very reputation in someone else's hands. We have guaranteed something we cannot guarantee. We've said that they will be faithful to pay a debt - and have said that we will be good for the debt if they are not. This is wildly unwise - and something God is very much against.

Here is another picture of how much God wants us to steer clear of financial situations like this. He tells us that not even sleep before we get ourselves out of this financial mess. Give no sleep to your eyes or slumber to your eyelids. Don't even go to sleep until you've gotten yourself out of this situation. We are being told that this is a very dangerous, foolish thing we've done - and that until we've undone it - don't even sleep.When you find that you've made the bad decision to be surety for someone else - the Bible tells you to deliver yourself from that situation. This word is a strong one - because it speaks of being delivered from the power of someone else. It has the idea of someone having much power over you - and is used with things like being in the power of an enemy - or even death. Surety places us in the power of someone else. They now have power over our reputation and our good name. God's counsel is to get out of that situation as soon as you can!

Solomon tells us that we've come into the hand of our neighbor in this situation. Hand here means the palm of their hand. It has the picture of being at the mercy of someone else - being in their absolute power. Again the picture given to us is of being at the mercy of another. The result of this precarious situation is that you need to do two things. First, go humble yourself before your neighbor. You've made a serious mistake, and you need to go in humility to admit your mistake. This may hurt - but you really don't want someone else responsible for your financial reputation and your financial well-being. This is serious enough that you also need to importune your neighbor to deal with this. Importune has the idea of going to them and doing whatever needs to be done to get out of this situation. Let them know that you cannot remain in this situation. We honestly need to see this as God does. Many people see no harm in being surety - and yet God tells us that this is a very unwise situaiton. It is one thing to invest - another to give a loan that needs to be repaid - even another to just give someone money they need. But here we are placing our very reputation in someone else's hands. We have guaranteed something we cannot guarantee. We've said that they will be faithful to pay a debt - and have said that we will be good for the debt if they are not. This is wildly unwise - and something God is very much against.

Here is another picture of how much God wants us to steer clear of financial situations like this. He tells us that not even sleep before we get ourselves out of this financial mess. Give no sleep to your eyes or slumber to your eyelids. Don't even go to sleep until you've gotten yourself out of this situation. We are being told that this is a very dangerous, foolish thing we've done - and that until we've undone it - don't even sleep.

Lastly, we read of two final metaphors that help us to see how serious this situation is. We should view it like a gazelle views being in the hunter's hand. A gazelle see this as extremely dangerous - possibly fatal to be in the hand of the hunter. The hunter has no regard for the safety or the well being of the gazelle. The animal is there for the use of the hunter - and only for that purpose. Thus the hunter has no interest in the ultimate best interests of the gazelle. Thus the one in surety has someone that could honestly care less about the ultimate best interests of the one who has given their word for his debt. Thus the one who foolishly stepped into this situation needs to get out as quickly as possible.

The last picture is of a bird who is in the hand of the fowler. Once again the bird is in the hand of one who wants to kill him. The fowler is interested in a meal - and the meal is the bird himself. To be in these hands is to be in hands that are very dangerous. Thus the bird should want to get our of this situation very very quickly. To do otherwise is to risk life and limb (or wing in this case).

Surety is something the Word of God teaches is financial suicide. This may not register with our society all that well since we are often in the habit of making pretty foolish decisions regularly. Yet, if we want God's fullest blessing on our finances, we would be wise to heed this warning and avoid guaranteeing another's debt like we would avoid the bubonic plague.

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The Danger of Surety . . . Proverbs 6:1-2

3/6/2010

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My son, if you have become surety for your neighbor, Have given a pledge for a stranger, 2 If you have been snared with the words of your mouth, Have been caught with the words of your mouth, Proverbs 6:1-2

Surety . . . this is a topic that Proverbs spends a decent amount of time discussing. We are told very clearly that we are not to become surety for anyone. But maybe we're getting ahead of ourselves. What does it mean to be "surety?"

Surety is giving a pledge or a guarantee. It means we take responsibility for debt of someone else. The Bible makes is clear to us that this is not a wise thing to do. In fact, what is said here is that if we have become surety for a neighbor, or have given a pledge to pay a debt for them - that we've put ourselves in very serious danger. It is referred to as being caught in a snare.

The snare mentioned here is one that was used to capture birds. The word figuratively means to catch a person or persons in an undesirable situation. The bait for this trap is usually a desire for something that is outside of God's will. It can be pride, a desire to please others more than pleasing God, or any number of other things, but whatever it is, it lures us into a trap.

Why is this a trap though? Surety is a trap because we are putting ourselves into a position where we are guaranteeing the actions and character of someone else. If they do not pay - we are on the hook for whatever they don't do. Thus, with a promise or a simple signing of our name on a dotted line, we've placed ourselves in bondage for someone else's debt and responsibility. That is not wise - because we have our reputation on the line until that debt is paid. No wonder God says for us to stay clear of situations where we place ourselves as surety for someone else. It puts us into an unnecessary jeopardy regarding our reputation - and because we are seen as representatives of God - His as well.

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Guarantors and Unwise Financial Positions - Proverbs 22:26-27

Advice for the "Guarantor." Proverbs 11:15

Strong Consequences for Guaranteeing Other's Debt - Proverbs 20:16

Unwise Financial Actions - Proverbs 17:18

When Sin Requires Consequence - Proverbs 27:13

The Incredible Danger of Assuring Someone Elses Debt - Proverbs 6:3-5

The Danger of Surety . . . Proverbs 6:1-2

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