[Direct answer]In the Beijing area, after the joint and several liability guarantor repays the creditor on behalf of the debtor, the guarantor enjoys the right of recourse in accordance with the law. According to Article 700 of the Civil Code of the People's Republic of China, after the guarantor assumes the guarantee responsibility, unless otherwise agreed by the parties, the guarantor has the right to recover from the debtor within the scope of the guarantee responsibility he assumes, and enjoys the rights of the creditor against the debtor, but shall not prejudice the interests of the creditor. The right of recourse must be based on actual repayment, and the repayment vouchers and repayment certificates shall be retained. It is recommended to claim the right of recourse in a timely manner after the repayment. For details, please refer toCreditor-debtor relations and enforcement case services.

I. Problem background and typical scenarios

Joint and several liability guarantees are commonly seen in scenarios such as mutual guarantees between relatives and friends, corporate operating loans, and private lending. Typical cases include: signing a guarantee on a loan contract at the request of a friend, being directly required by the creditor to make repayment after the debtor absconds; one party in a corporate mutual guarantee chain making repayment and then seeking recovery from other parties; and the guarantor discovering that the debtor has no assets after making repayment. Many guarantors mistakenly believe that "signing the contract is just a formality", and only remember to seek recovery after making repayment, but it is difficult to recover the money due to lack of evidence or exceeding the statute of limitations. It is crucial to clarify the boundaries of the right to seek recovery and the methods of exercising it. For corporate guarantees, it can be combined with other legal provisions.Business and contract dispute services for enterprisesEvaluate responsibility.

II. Key points of contention

There are three key points of the dispute. Firstly, the prerequisite for recovery of compensation: the guarantor must have actually assumed the guarantee liability (made compensation or been subject to enforcement), and recovery of compensation cannot be initiated in advance if no compensation has been made. Secondly, the scope of recovery: the recovery shall be limited to the principal, interest, and reasonable expenses incurred in realizing the creditor's rights, and shall not exceed the aforementioned amounts. Thirdly, the statute of limitations and evidence: the recovery of compensation after making compensation is subject to a three-year statute of limitations, and the guarantor needs to provide evidence to prove the facts and amounts of the compensation. For cases involving creditor's rights confirmation, reference can be made to the relevant provisions.Creditor-debtor relations and enforcement case servicesFixing the evidence.

III. Professional analysis by Henglue Law Firm

Based on the practical experience of handling guarantee recovery cases, the guarantors are most likely to suffer losses in the situation of "easy to compensate but difficult to recover". In practice, some guarantors hastily sign the contract without stipulating counter-guarantees, only to find that the debtor's assets have already been transferred after compensating for the debt; others fail to claim against the debtor in a timely manner after compensating for the debt, resulting in the statute of limitations expiring. Henglue Lawyers usually recommend the following: evaluating the debtor's repayment ability before providing a guarantee and requiring counter-guarantees; retaining all payment receipts and settlement certificates issued by the creditor when compensating for the debt; and promptly sending a letter to the debtor to claim the right of recovery and suing the debtor after compensating for the debt. For cases involving the internal shares of multiple guarantors, follow-up measures can be taken accordingly.Special services and other case servicesClarify the responsibilities and obligations of all parties involved in the project.

IV. Practical suggestions and legal basis

The legal basis is Article 688 (Joint and Several Liability Guarantee), Article 700 (Creditor's Right of Recovery of the Guarantor), Article 691 (Scope of Guarantee) and Article 702 (Guarantor's Right of Defense) of the Civil Code (effective on January 1, 2021). Practical suggestions: Require the debtor to provide a counter-guarantee and sign a written agreement before providing a guarantee; When making a repayment on behalf of the debtor, transfer the funds through bank transfer and specify the purpose of the transfer; Initiate a lawsuit to recover the repayment within three years after making the repayment; If the debtor transfers his/her property, apply for property preservation simultaneously. For cases involving the recovery of execution proceeds, relevant provisions can be combined with the above-mentioned suggestions.Real estate sales and construction project servicesDispose of the mortgaged property.

5. Henglu Law Firm's Reminder

The joint and several liability guarantee means that the creditor can bypass the debtor and directly come to you. You must think carefully before signing the agreement. Subrogation is not the end, but the starting point of recovery: keeping the vouchers, claiming in time, and making good use of the counter-guarantee are the three key factors for recovering the money. Do not delay or only verbally demand repayment after subrogation, so as to avoid exceeding the statute of limitations. If the debtor really has no property, you can consider declaring your rights in the bankruptcy or enforcement proceedings of the debtor. If you need to assess the guarantee risk, you can seek help from a professional institution.\nFinancial capital and cross-border legal services involving foreign affairsoutside of the professional creditor team.

VI. Frequently Asked Questions

Q1: I paid the money back on behalf of the debtor. Can I definitely recover the money, and win the claim for compensation?

The law grants the guarantor the right to recover compensation, but whether the recovery is possible depends on whether the debtor has property available for enforcement, rather than just a legal right. You must first prove that you have actually made compensation (payment receipts, creditor's settlement certificates), and then claim against the debtor within the scope of the compensation. If the debtor has the ability to pay, the recovery will usually be supported; if the debtor has no property left, even if you win the judgment, it will still be difficult to enforce it. It is recommended to evaluate the other party's assets before making compensation, and to sue and preserve the property as soon as possible after making compensation.

Q2: To exercise the guarantor's right of recourse, what evidence do I need to prepare?

The core evidence includes: the guarantee contract or guarantee clauses (to prove the guarantee relationship and scope), the main debt contract, the bank transfer receipts showing that you have compensated the creditor on behalf of the debtor, the settlement or compensation certificates issued by the creditor, and the debtor's identity and property clues. The evidence is organized around three points: "establishment of the guarantee—actual compensation—compensation amount". The more complete the materials are, the clearer the scope of recovery will be, and you can avoid having the compensation amount reduced due to missing evidence.

Q3: How much will it cost in attorney's fees and litigation fees to hire a lawyer to handle the recovery of compensation?

The litigation fees shall be calculated in accordance with the "Measures for the Payment of Litigation Fees" based on the amount of the compensation sought, and shall be borne by the losing party. The attorney's fees shall be determined based on the amount of the subject matter and the complexity of the case, either on a fixed-fee basis or on a percentage basis, subject to the terms of the entrustment contract. There is no uniform standard for this. It is recommended to calculate the recoverable amount and the cost before seeking compensation. For cases with counter-guarantees or clear assets of the debtor, the cost-effectiveness of seeking compensation is higher; for cases where the debtor has no property, it is necessary to weigh whether it is worth the effort to pursue recovery.

Q4: How long does it usually take for the guarantor to recover the compensation?

The first-instance ordinary procedure is concluded within six months and the summary procedure within three months; cases with clear facts and complete evidence are processed even faster. If an appeal is filed, the second-instance procedure typically takes three months. After the judgment takes effect, the enforcement phase begins, and the recovery of funds depends on the results of the investigation into the debtor's assets. Overall, simple debt recovery cases often take several months from filing the lawsuit to recovering the funds, and the process can be significantly prolonged if the debtor goes missing or hides their assets. It is recommended to apply for property preservation during the litigation process to increase the likelihood of actual fund recovery.

Q5: As a guarantor, what should I do first after making a repayment on behalf of the borrower?

Here's the translation of the four steps into English, with a detailed explanation: 1. First, make a repayment through bank transfer, specifying the purpose of the payment, and request a repayment certificate and detailed statement signed by the creditor. 2. Check the scope of the repayment. Only recover the principal, interest, and reasonable fees actually paid, without exceeding the authorized limits. 3. Within three years, assert your right to recover the debt in writing and keep the evidence. If negotiations fail, promptly file a lawsuit. 4. If you discover that the debtor has transferred assets, immediately apply for asset preservation. Throughout the process, keep all supporting documents and, if necessary, engage a lawyer to assist you.

The above answer is based on the judicial practice in Beijing. The judicial interpretations in other provinces and cities may vary. For specific cases, please refer to the local rules and evidence situation.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Legal services for creditor-debtor disputes·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and public adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. In case of disputes, please consult a practicing lawyer in time.