Question: I am sometimes approached by people to sign as a guarantor on a loan they wish to take from a free loan fund. Aware of the desperate situation they are in I am moved to help them but my awareness of the extreme difficulty they face in repaying the loan arouses a fear that I will be stuck with paying it. What is the right thing to do?

Answer: It is certainly a great chessed to lend money to someone in need and to help someone secure a loan by acting as guarantor. You must, however, take into account that though the borrower may have every intention of paying back the loan, he may be relying on an entirely unrealistic plan for doing so. It would therefore be prudent if you followed these two guidelines:

1. Ascertain that the borrower has a realistic plan for paying back the loan. (It might even be a good idea to ask for references from people who have loaned him money in the past.)

2. Guarantee only as much money as you are ready to lose in order to help a needy person.

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