Legal Position Agreement with Personal Guarantee at Bank Medan

Branch

Vincent Leonardo Tantowie, Willy Tanjaya, and Herman Brahmana, Elvira Fitriyani Pakpahan

Magister of Notary, Universitas Prima Indonesia, Jl. Sekip Simpang Sikambing, Medan, Indonesia

Keywords: Legal Agreement, Guarantee and Personal Guarantee.

Abstract: In providing credit facilities, all banks always refer to the Loan to Value of the credit value. The value of the

collateral provided is in the form of material guarantees, whether installed on a KPR, KPR, Fiduciary basis

or Pawn and Cessie. If there is a lack of guarantee value that is relaxed by the internal and external

assessment team, the Bank always asks for additional guarantees in the form of personal guarantees

(personal guarantees) or company guarantees (company guarantees). This must be watched out for by

bankers or legal officers of a finance company where if a company or individual has provided personal

guarantees for a debt from a certain debtor, then it must be given strict provisions, that the guarantor must

also be accompanied by a material guarantee.

1 INTRODUCTION

Banks as a company engaged in finance, all banking

activities are always related to the financial sector,

so talking about banks is inseparable from financial

problems. Banking activities that are the first to raise

funds from the wider community known as banking

activities are funding activities. Raising or seeking

funds by buying from the wider community is what

is meant by fundraising.

The main activity of a bank is to raise and

distribute funds, while the bank's supporting activity

is to provide other bank services. Fundraising

activities include collecting funds from the public in

the form of demand deposits, savings and time

deposits. This can be done by providing attractive

remuneration such as interest and gifts as a stimulus

for society. Fund distribution activities are in the

form of providing loans to the community.

Meanwhile, other banking services are provided to

support the smooth running of these main activities.

Currently, it cannot be denied that in the banking

world many people use certain temporary work

agreements because it is more profitable for the

company, both in terms of employees who are

always productive, and the company does not need

to spend more money to pay severance pay (when

employees stop working because the contract

expires). Many other situations arise in practice

where clear legal procedures cannot be applied. In

this note, attention is paid to the importance of

structuring the details of claims and the

consequences for which employee claims are

formulated incorrectly. Possible solutions available

to employees in terms of both general law and

statutory are investigated (Barnard, 2010). If we

look deeper into the business activities of banks, in

carrying out their business, banks in Indonesia must

be based on the principles of economic democracy

that use the principle of prudence. In the nation-

building process, banks have macro and micro

functions, this is clearly illustrated through the bank

philosophy.

Factors that are thought to contribute to the risk

position of public and private actors are evaluated.

In addition, the relationship between the risk

position of public private buyer-supplier, duration of

contract and private, supplier side investment is

discussed. The results show that a well-structured

long-term contract can: 1) provide the risk

mitigation mechanism needed for both public and

private actors, and 2) facilitate supplier-side private

investment (Hartman, 2020). Banks have a very high

level of risk in lending in the form of credit, so it is

appropriate to take extra careful and objective

measures in approving or applying for credit by

debtors so as not to potentially harm the bank in the

future. To deal with this risk, Article 2 of the

Banking Law mandates the principle that banks in

carrying out their business activities must be based

408

Tantowie, V., Tanjaya, W., Brahmana, H. and Pakpahan, E.

Legal Position Agreement with Personal Guarantee at Bank Medan Branch.

DOI: 10.5220/0010312800003051

In Proceedings of the International Conference on Culture Heritage, Education, Sustainable Tourism, and Innovation Technologies (CESIT 2020), pages 408-416

ISBN: 978-989-758-501-2

on economic democracy with the principle of

prudence. In providing credit, banks are required to

have confidence in the ability and ability of the

debtor to pay off his debt in accordance with the

agreement, if it is clearly written in Article 8 of the

Banking Law.

To minimize the possible risks that will occur at

the time of lending, banks must act prudently,

carefully, carefully and wisely or not carelessly in

raising funds and channeling them back to the

public. This is a precautionary principle that must be

followed and followed by banks in order to reduce

risk. Organizations can measure trustworthiness and

manage it to build trust and strengthen loyalty

intentions among its consumers. A possible

extension is to conduct longitudinal studies to map

the nature of trust and loyalty that develops over

time and stages of customer life. Virtue and

problem-solving orientation of FLEs and MPPs on

their belief in FLEs and MPPs and loyalty intentions

(Shainesh, 2012). The main function of a bank is as

a financial intermediary, meaning that all money or

funds obtained from public savings must be

channeled back to the community in the form of

loans / credits. Lending is the provision of money

lending by banks to members of the public which is

generally accompanied by the provision of credit

guarantees by the debtor (borrower).

The credit analysis process must be passed first.

When a customer wants to apply for credit to a new

bank, the customer will be given a decision to

approve or reject the credit. The most important

objective of the credit analysis process is for banks

to make good and correct credit decisions so as to

avoid credit decisions that lead to bad credit.

Households adopt contracts that rely on unverifiable

outcomes, which cannot be formally contracted

when the penalties for breach of contract are weak.

In contrast, households adopt contracts that rely on

legally contractable and verifiable results when

penalties are severe. This evidence is consistent with

the terms of the contract that is optimally selected

considering what can officially be contracted or not

(Michler, 2020).

The history of antitrust law is full of firms that

are regulated as single entities under company law,

but function as competitors and are treated as such

by antitrust laws. This allows productive assets to

remain intact, but forces decision makers to behave

competitively. Finally, this paper looks at the

problem of nascent enterprise platform acquisitions,

where the greatest threat is not from horizontal

mergers but from complementary acquisitions or

differentiated technologies. For this, the tools

currently used in the merger law are less suitable

(Hovenkamp, 2020).

In lending, Banks must have confidence based on

an in-depth analysis of the debtor's intention and

ability as well as the ability to repay credit as agreed.

Before credit is granted, to convince the bank that

the customer can truly be trusted, the bank first

performs a credit analysis. Credit analysis includes

customer or company background, business

prospects, guarantees provided and other factors.

The purpose of this analysis is to make banks

believe that the credit they provide is truly safe.

Providing credit without prior analysis will be very

dangerous for banks.

In providing credit, every bank has risks so that

lending must be carried out carefully with due

observance to the principles of sound credit by

applying the principle of prudence to ensure

certainty that the bank will get all debts from debtors

in the form of principal and interest (when the loan

falls. tempo). Relate to trust as articulated in the

organizational stakeholder trust model. Scholars in

marketing need to develop a more macro view of the

company that examines trust outside of customers to

reflect broader stakeholder focus and corporate

social responsibility issues. A reputation of trust and

a license to operate will be needed to restore and

maintain stakeholder confidence in the big banks.

Building a trustworthy bank is essential for social

and economic progress (Hurley, 2014).

To reduce this risk, the guarantee of credit

extension in the sense of confidence in the ability

and ability of the debtor to pay off the agreed

obligations is an important factor that must be

considered by the Bank. To obtain this guarantee,

before extending credit, the Bank must carefully

assess the character, ability, capital, collateral and

business prospects of the debtor. In this case, the

Bank must have and implement credit guidelines in

accordance with the provisions stipulated by the

Financial Services Authority Number 42 / POJK.

03/2017 concerning the obligation to formulate and

implement bank credit or financing policies for

Commercial Banks.

Certain temporary work agreements only apply

to certain jobs, which according to the type and

characteristics or work activities will be completed

within a certain time, namely after the work is

completed or temporary work which is expected to

be completed in less than a short time. Time and a

maximum of 3 (three) years, the work is seasonal

and work is related to new products, new activities,

or additional products that are still under trial or

investigation. This is clearly written in the

Legal Position Agreement with Personal Guarantee at Bank Medan Branch

409

Manpower Law. That moral outrage must be an

explicit solution and a philosophically informed

approach to judicial interpretation requires

expressions of moral anger from judges to address

ongoing injustice or threats of injustice aimed at

vulnerable communities such as women and

religious minorities in the current political climate

(Rudolph, 2020).

Lending is the provision of money lending by

banks to the public which is generally accompanied

by a credit guarantee by the debtor (borrower).

Acceptance of credit guarantees is linked to various

legal provisions of the guarantee. The loans

provided are always secured by credit guarantees

which aim to avoid the risk of debtors not to pay

their debts. The guarantee given by the debtor must

be made an agreement between the creditor and the

collateral owner (can be a debtor or other non-

debtor) which is called a guarantee binding

agreement. The lack of clarity about the validity and

adjustment of the new law has sparked disputes over

the implementation of the PKB. Based on the good

intentions of the PKB parties, changes can be made

through negotiations in accordance with the

mechanisms stipulated in the Legislation. The

position of PKB is an autonomous law that applies

to companies and is an important element in the

prevention and settlement of Industrial Relations

Disputes. Finally, settlement through bipartite,

tripartite, and the Industrial Relations Court is a

mechanism that can be carried out for disputes of

interest (Sudiarawan, 2019).

Lending is intended to give creditor confidence

to the debtor even though this trust carries a high

risk. Therefore, in providing credit, there are several

elements that are often referred to as the credit

element, namely:

• Trust is a lender that gives assurance to credit

recipients that the credit given will be received back

within a certain period of time at a later date. Trust

is the belief in giving credit that the credit given (in

the form of money, goods or services) will actually

be received back at a later date.

• Grace Period is the period between the period

of credit extension and repayment of credit. The

value of money at the time of granting credit (agio

value) is higher than the value of money that will be

received at the time of repayment of the credit at a

later date. Each credit given has a certain period,

including the agreed credit repayment period.

• Risk degree is the level of risk that will be

faced due to the time period that separates the

provision of credit and repayments of credit at a later

date. The longer the payback period, the higher the

risk level. Because there is an element of risk, the

credit agreement requires collateral. The risk that

there is a grace period for repayment will lead to the

risk of non-collection / default on credit. The longer

the credit the greater the risk and vice versa. This

risk is borne by the bank, whether it is an intentional

risk by a negligent customer or an accidental risk.

Risk is the risk that may occur during the period

between granting and repayment of credit, so as to

secure credit disbursement and cover the possibility

of default from borrowing customers, it is bound by

collateral and collateral.

• Agreement, this agreement includes an

agreement between the lender and the credit

recipient. This agreement is set forth in an

agreement where each party signs its rights and

obligations.

Credit basically has a purpose or use to meet

human needs. Judging from its nature, this credit can

be categorized as consumptive or productive credit

depending on the treatment. Each credit given has an

agreement that contains the ability to pay within a

certain period. The repayment period is usually

adjusted to the amount of credit given. This credit is

seen from the flow of funds provided between

borrowers and lenders and the mechanisms therein.

Credit is given to encourage economic activity in

certain sectors in order to increase production

productivity, which is usually intended for export

activities. To provide a sense of security in

providing credit, guarantees are needed so that both

parties have a sense of responsibility for their

respective obligations. Employees' freedom of

expression is threatened. To counter this trend,

privacy laws, recently surpassed in the EU by the

General Data Protection Regulation or GDPR, and

more generally the principle of proportionality, can

represent an effective instrument to prevent

technology from exacerbating the condition of

employee subordination (Punta, 2019) . By looking

at a person's financial capabilities or assets will be

the basis for determining the level and type of credit

to be given. Each credit given has its own

mechanism in the process of withdrawal and

repayment.

The bankruptcy decision from the guarantor can

be fulfilled by the judge as long as the requirements

for the bankruptcy statement letter are met, namely

the debtor has more than one creditor and one of the

debts is due and can be claimed and the guarantor

has escaped from his privileges (Anisah, 2002).

Achievements given are achievements in the

form of goods, services or goods, services or money.

In the development of credit in the realm of Islam

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what is meant by achievement in providing credit in

the form of money. Achievement or credit object is

not only given in the form of money, but also in the

form of goods or services. However, because current

Islamic economic life is based on money, credit

transactions involving money are what we encounter

in lending practices.

An extension of subpoena powers held by

agencies such as the SEC, FTC, and EPA and is the

lynchpin of a system that relies on private plaintiffs

to enforce our most important laws. By forcing

parties to disclose large amounts of information, the

findings prevent harm and most importantly shape

industry-wide practices and the core behavior of

regulated entities. This approach has various

implications for the scope of findings as well as the

cost debate. Therefore, scholars and courts must

grapple with the consequences of what I call

"regulatory discovery" for the entire legal system

(Zambrano, 2020).

Credit in banking activities is the main business

activity because the largest income from bank

business comes from income from credit business

activities. Giving bank credit will be very useful if

the credit provided is in accordance with the goals

and needs. However, the funds from credit

disbursement must be returned by the debtor to the

bank, so that the funds from credit disbursement

must be used wisely.

Meanwhile, guarantees in banking activities are

one of the elements in lending to banks. Collateral

can be in the form of something or goods that are

made an obligation in the form of a loan. Banks in

providing credit are accompanied by certain

guarantees. The existence of credit guarantees is one

way to reduce bank risk in lending. When a

customer provides personal guarantees to a third

party creditor, usually a bank or other business

lender, the customer agrees to act as guarantor of the

other party's debt obligations. That means if the

company defaults on the loan, the customer has

guaranteed to step in and pay in return.

Customer obligations are secondary to the main

obligations between the borrower and the lender, if

the borrower does not have payment due, the

borrower cannot be found in a position of liability.

Article 1131 of the Civil Code states that all

objects or assets of a person become collateral for all

debts. If the debtor does not fulfill his obligations,

the debtor can with certainty and easily exercise his

rights against the debtor by obtaining a higher

position than other debt collectors.

There are several types of material guarantees

and forms of guarantee which are binding under

Indonesian law. The form of collateral binding

depends on the type of object that is guaranteed to

move or not the object moves.

All guarantee agreement agreements are

accessoir, meaning that the guarantee commitment

agreement exists or exists depending on the main

agreement, namely the credit agreement or debt

agreement.

In daily banking law practice, this guarantee is

used as a complementary guarantee (which

complements the provision of existing guarantees).

There is no mention in the individual Guarantee

regarding certain assets owned by the Guarantor

which are used as collateral for the repayment of

debtors' liabilities to the Bank. In providing credit

there must be two ways of repayment (way out), the

first method of repayment is cash (the first way out

of credit is cash), the second way, collateral (the

second way out of credit is collateral). The second

solution (guarantee) for creditors is an alternative

solution if the first alternative does not work as

expected.

Because with a guarantee agreement if the debtor

is negligent in performing, the guarantor is obliged

to replace the debtor's position to carry out the

achievement. In a guarantee agreement, the

individual guarantor is usually required to relinquish

his privileges to protect his position. The release of

this privilege causes the individual guarantor to be

responsible in the event that the debtor's wealth is

insufficient to pay off his debt (Susilowati, 2016).

In practice, the individual guarantee agreement is

less profitable because the creditor is only a dual

creditor who has to compete with other creditors to

fulfill the debtor's obligations, and because the third

party also does not bind certain assets in the

agreement, the third party often rejects the ability.

Agreement analysis is carried out on the

customary law of the agreement which becomes the

appropriate law so that it becomes material related to

evaluation, there needs to be improvements in the

supervision of the applicable regulations

(Rajamanickam, 2019). Individual guarantee is

someone's guarantee from a third party whose

function is to ensure the fulfillment of the debtor's

obligations. In other words, an individual guarantee

is an agreement between the debtor (creditor) and a

third party that guarantees the fulfillment of the

debtor's (debtor) obligations.

In the event of an execution in which the

Guarantor has to pay debtor's debt to the creditor,

the guarantor's debt to the creditor can be taken from

one of the Guarantor's assets, except those that have

been burdened with other collateral such as

Legal Position Agreement with Personal Guarantee at Bank Medan Branch

411

Mortgage, Pawn or Mortgage. However, the

implementation of this guarantee agreement is very

difficult because there is only the ability of the

guarantor, namely a third party or certain company

that is used as a guarantee. Without the support of a

material guarantee agreement that binds third party

individual guarantees cannot be executed. A bank

loan is a new form of guarantee that is not covered

by general guarantees and special guarantees. This

shows that the legal guarantee system in Indonesia is

no longer a purely closed system, but has begun to

shift to an open system.

This also happens to Bank X Medan Branch

where the Bank provides credit to debtors

accompanied by personal guarantees, so that in the

credit agreement there is a third party that

guarantees the creditor the fulfillment of the debtor's

obligations. When the debtor defaults, the third party

acting as guarantor pays the debtor's remaining debt.

But in reality, the execution of a third party is very

difficult to do because it is not accompanied by a

material guarantee by the Guarantor.

It should be noted that in providing credit

facilities, Bank X always refers to the Loan To

Value of the credit value against the value of the

guarantee provided, namely in the form of material

collateral, whether installed as KPR, Mortgage,

Fiduciary or Pawning and Cessie, and if there is a

lack of collateral value then it is loosened . Usually

internal and external assessment teams, banks

always ask for additional guarantees in the form of

personal guarantees or company guarantees.

The laws and regulations governing

accountability in articles 1820-1850, protection is

only given to the guarantor with several privileges.

Banks tend to be less protected because banks

cannot take steps to resolve the credit debtor

concerned. Whereas the underwriter is not

cooperative in carrying out the achievement of

defaulting debtors, the protection of the Personal

Guarantee creditors obtained through the clause in

the underwriting agreement is intended to provide

legal protection for creditors of the financial services

authority which regulates (that the guarantee

agreement must be authentic deeds and submission

of counter guarantees by the insurer and its

formulation) . The clause in the underwriting

agreement proposed by the researcher aims to

equalize the clause in the underwriting agreement as

a form of legal protection for creditors and so that

important clauses are not included in the

underwriting agreement (Wulandari, 2017).

This is what bankers or legal officers of a

financing company must be aware of, where if a

company or individual has provided personal

guarantees for a debt from a particular debtor, it

must be given clear provisions, that the guarantor

must also be accompanied by a material guarantee.

Supreme Courts, lower federal courts, and state

courts routinely handle disputes arising from the

multilateral nature of intergovernmental agreements.

The main framework that courts use to resolve such

disputes is private contract law, but they also adapt

the principles of such contracts - often in an ad hoc

manner - to accommodate public parties and their

public objectives. By drawing the cases together

across contexts, parties can see the doctrinal

patterns, jurisprudential conundrums, and theoretical

implications that stem from the dual character of

contract law and public law. A treaty law for

American federalism can be established (Fahey,

2020). In the banking world, the process of granting

and assessing credit between banks is not much

different. These differences are usually only in the

procedures and requirements that are set in each

bank, which varies according to their respective

considerations.

These capital outflows will be associated with

low income volatility, while capital inflows will be

associated with high income volatility. The negative

effect of financial liberalization on income volatility

in developing countries is due to the fact that the

majority of these countries have capital inflows that

are larger than those of capital outflows. Therefore,

excess capital inflows in developing countries

increase pressure and vulnerability to crises

(Feriansyah, 2018). The process of providing credit

can generally be distinguished between individual

loans and loans by legal entities, and can also be

seen from a consumptive or productive perspective.

The process of credit analysis and approval will

be carried out in accordance with the Bank's work

guidelines and cannot be separated from the

provisions of Bank Indonesia which require each

Bank to apply the principles of prudence and risk

management in the context of providing funds

because lending (is the main activity of banks and is

the main source of bank failure. and contains a high

risk that can affect the soundness and survival of the

bank). Therefore, it is necessary to clearly regulate

the parties involved in the credit extension process.

There must be a clear separation between the

functions, duties and powers and responsibilities of

each work unit involved in credit processing.

Lending should not be arbitrary and will be

monitored. There are debtors who have experienced

a decline in credit quality but still have a fairly good

business prospect (according to the provisions of the

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412

Bank Indonesia regulation that banks carry out credit

restructuring).

Credit restructuring is an effort to increase bank

credit activity for debtors experiencing difficulties in

fulfilling their obligations. Credit restructuring can

only be carried out by banks against debtors who

meet the criteria. The debtor has difficulty paying

the principal and / or interest on the loan. Debtors

still have good business prospects and are

considered capable of meeting obligations after the

credit restructuring. Credit restructuring cannot be

carried out for the sole purpose of improving credit

quality or avoiding an increase in the formation of

PPA without considering the criteria for debtors as

mentioned above.

The loan to be restructured must be analyzed

based on the debtor's business prospects and the

ability to pay based on cash flow income. Loans to

be restructured must be analyzed by an independent

financial consultant who has a business license and a

good reputation. Each stage in the implementation of

credit recovery and the results of the analysis carried

out by banks and independent financial consultants

on restructured loans must be completely and clearly

documented. This loan is one of the main studies

that will be analyzed and used as a reference in

accordance with the provisions of the Bank

Indonesia regulation that banks carry out credit

restructuring.

2 METHOD

This study uses empirical legal research that comes

from field research with a comparison of regulations

and prevailing events compared to legal research

topics related to applicable regulations. Then a

comparison of the provisions to get a better change

value is found against the legal findings. As a source

of analysis, it is obtained from legal materials,

namely statutory regulations, journals, materials and

existing bank regulations.

This research looks at the rules governing the

legal position that becomes personal collateral in the

bank, both in company regulations and in applicable

state regulations. The results of this study will be a

comparison that produces helpful rules and becomes

a good result.

3 RESULTS AND DISCUSSIONS

3.1 Legal Position of an Agreement

with Individual Guarantee

Article 1820 of the Civil Code up to Article 1848 of

the Civil Code regulates individual guarantees. In

practice, the form and material of the credit

agreement between one bank and another bank are

not the same. This happened in order to adapt to the

needs of each party. Thus the credit agreement does

not have a generally accepted form, it's just that in

practice many things are usually included in the

credit agreement (for example in the form of

definitions of terms used in the agreement, the

amount and time limit of the loan, determination of

loan interest and penalties). If a debtor is negligent

in paying his debts and other things that sometimes

benefit the creditor (because sometimes the debtor

loses money), it is necessary to make it difficult for

the debtor not to sign a credit agreement.

However, prohibition number 8 of 1999

concerning consumer protection in Article 18

paragraph (2) has also been regulated, which states

that business actors are prohibited from including

standard clauses whose location or shape is difficult

to see or cannot be read clearly or is difficult to

understand. In fact, according to Article 18

paragraph (3) of Law Number 8 Year 1999, the

agreement was declared null and void by law.

In practice, the bank applies the elements of a

credit agreement between the debtor, creditor and

guarantor, including:

• In accordance with the agreement between the

debtor and bank which will be outlined in the credit

agreement where the bank promises to provide loan

facilities according to the needs of the debtor in

developing his business, accompanied by terms and

conditions that must be met by the debtor and the

debtor also promises to return all debts and interest

such as promised to the bank.

• The debtor / guarantor who enters into a credit

agreement with the bank must have the ability to

take legal actions in accordance with the provisions

of the prevailing laws and regulations and is the

person who has the right to take action on the

collateral object that will be used as collateral (used

as collateral to the bank).

• The credit agreement / guarantee agreement

must contain something that is the rights and

obligations of the parties between the creditor,

debtor and guarantor, if a dispute occurs in the

future, in this case what is meant is the obligation of

Legal Position Agreement with Personal Guarantee at Bank Medan Branch

413

the debtor / guarantor to pay debtor debt as

promised.

• The credit agreement and guarantee agreement

made by the parties must not conflict with applicable

laws and regulations.

Because individual / company guarantees in

banking practice in Indonesia are only additional

guarantees and refer to more moral obligations, the

implementation of individual / company guarantees

is still very difficult. In an individual / company

guarantee, there is no certain part of the surety's

assets that is designated as collateral. This causes

credit to be in a dual position, which means that if a

debtor has obligations to several creditors, the

creditor has an equal position. Thus, the fulfillment

of the guarantor's obligations is carried out

proportionally in accordance with the debtor's debt

to each creditor. The action that has been taken by

the bank is to sue the individual guarantor through a

commercial court, namely by the bankruptcy of the

individual guarantor to immediately pay off the

remaining debtor's debt to the bank. Subsequently,

filing a bankruptcy suit against an individual

guarantor must be accompanied by at least one other

creditor.

In general, the provision of credit by banks

always refers to the principle of prudence, and the

credit limit given is based on the loan to value of the

collateral value after being assessed by an internal or

external assessment team, and the credit limit for the

value of the collateral is around 70% - 80%. For

example, the debtor submits a loan of Rp. 10 billion

and after being analyzed it is feasible to be financed

with a loan value of 70% with a guarantee of Rp. 12

billion, so the total loan that can be given is only Rp.

8.4 billion. The difference will be given an

additional guarantee in the form of an individual

guarantee and if the debtor fails to pay, the bank

always prioritizes the implementation of the main

collateral then submits additional guarantees.

However, there are exceptions to the nature of

accessoire, namely that someone can enter into a

guarantee agreement and it will remain valid even if

the principle agreement is canceled (if the

cancellation is the result of an exception that only

concerns the debtor's personal). For example, an

agreement made by a child who is not yet an adult is

asked to be canceled, while the coverage agreement

remains valid.

3.2 Settlement of Individual Guarantee

of Credit Problems

Responsibility for personal guarantee (Personal

Guarantee) has joint responsibility for all personal

assets that are owned for sale or auctioned publicly

as repayment of all debtor debts as agreed in the

personal guarantee agreement made with the bank (if

there is a claim from the bank in default) .

Banks can demand debtors to conduct an auction

for the implementation of collateral for assets given

to banks that have mortgage or fiduciary powers that

have executive power and preference rights against

other creditors and make ordinary civil suits against

personal guarantor (to pay off debtor's debt

immediately where the debtor has failed to pay.

loans provided by banks).

However, due to the demands for personal

guarantees, the bank's position as a creditor is only

concurrent and no material guarantee is given to the

bank to bind the guarantor. In practice, the bank

always prioritizes the collection of the debtor in

implementing the material guarantees given which

have the choice of preference. The certainty of

payment of debtor debts from the auction results on

the material guarantees provided by the debtor is

still lacking to pay off all debtor deductions, so the

next step for the bank will consider billing or suing

the personal guarantor to pay debtor debts either

civil claims or bankruptcy claims from personal

guarantor if the personal guarantor denies promise.

The guarantor has special rights guaranteed by

law. Guarantee privileges are:

• The right to request that the debtor's debt be

fulfilled by confiscating and then selling the debtor's

assets first. If it turns out that the debtor's assets are

still insufficient, the new creditor asks the guarantor

to pay the remaining debt that has not been fulfilled

(Article 1831 of the Civil Code).

• Fulfillment of debts as referred to in Article

1430 of the Civil Code. The guarantor has the right

to fulfill the debt between creditors and debtors.

Thus, this causes the debtor's debt to creditors to pay

off because the debtor has receivables equal to the

amount owed to creditors.

• At the request of the guarantor, the creditor is

not obliged to sell or confiscate the debtor's assets

(Article 1833 of the Civil Code).

• In the case of a guarantor consisting of several

people or several companies, the guarantor has the

right to request settlement of the debt that is borne

together in accordance with their respective

proportions. If one guarantor is unable to pay, then

the other guarantor must compensate to fulfill the

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guarantor's obligations by paying off the debt. If the

inability occurs after the debt is divided, there is no

obligation of the surety to fulfill the obligations of

the surety. The guarantor can settle the debt

fulfillment obligations at the initiative of the creditor

(Article 1837 and Article 1838 of the Civil Code).

• The guarantor has the right to ask for

compensation from the debtor or be exempted from

his obligation to provide individual / corporate

guarantees to the creditor for the related debtor's

debt. This applies if the surety is sued before a judge

to pay the debtor's debt. There is an agreement

between the debtor and the guarantor that after a

certain period of time the guarantor will be released

from his obligation to guarantee the debtor's debt.

The credit agreement does not specify the length of

time the guarantor must bear debtor's debt to the

creditor. Guarantor can request to stop acting as

guarantor after the last 10 years, except for

guarantees related to trusts.

• The guarantor has the right to file an objection

that the debtor can use to the creditor. Denial should

not only be related to the debtor's personal (Article

1847 of the Civil Code).

• The guarantor has the right to demand the

debtor to fulfill his obligations to the creditor or ask

the debtor to release the guarantor from the

obligation to pay the debtor's debt to the creditor

(Article 1850 of the Civil Code).

This special right is actually a special right given

by law to the guarantor when the guarantor makes a

guarantee agreement. However, these rights in

practice can make it difficult for a creditor to

demand fulfillment of his obligations to the

guarantor when the debtor is in default. With this

right, the surety can avoid his obligations at all costs.

Therefore, almost all forms of individual

guarantee agreement usually have a clause that

refers to article 1832 of the Civil Code that overrides

all guarantor privileges.

Debtors who no longer have business prospects

and the ability to pay principal and interest on debt

are classified as bad credit and will specifically be

handled by a special team that works together with

lawyers to carry out the process of executing

collateral debtors in terms of security, fiduciary,

under lien with rights preference or against

individual guarantees such as personal guarantees

and corporate guarantees that have concurrent rights.

And the settlement of bad credit that is handled

by the collection team does not all have to be done

through the court, but the bank still prioritizes the

settlement of deliberations first (for example, still

giving the opportunity to the debtor or guarantor to

sell the guarantee in advance of the payment of the

debt and also provide a good discount on the

principal or interest to be paid to facilitate the

debtor's ability to pay off debts). If the steps as

above have been taken and the debtor is still not

willing to pay off his debt by deliberation, the final

step for the bank is to take legal action by

implementing a clear guarantee in general. The

auction proceeds can be used to pay off debtors' debt

if there is an excess. Through the court it will be

returned to the debtor or guarantor, and if the

auction proceeds are still not sufficient to pay off the

debt, the bank is still entitled to collectively collect

from the debtor to pay off the debt.

However, in practice it is not as easy as the

process in general. At Bank X Medan branch itself it

is rather difficult to carry out execution due to

tracking assets belonging to individual guarantor and

requires a relatively large fee. Until now, one of the

Medan branch banks in Medan has never

implemented an individual guarantee. However, at

PT Bank X another branch has indirectly become a

separatist creditor for the bankruptcy lawsuit filed by

other banks on individual guarantees in the Supreme

Court decision No. 8 / PDT-SUS-PKPU / 2018

/PNNIAGA.MKS. During the bankruptcy period in

accordance with Article 55 paragraph 1 of the

Bankruptcy Law, separatist creditors can exercise

their own executive rights as if there was no

bankruptcy within 2 (two) months from the

commencement of bankruptcy.

Bankruptcy lawsuit against debtors or individual

guarantor is a last resort or alternative taken by the

bank with the following considerations: Bankruptcy

is the general confiscation of all assets of the debtor

or individual bankrupt guarantor whose management

and settlement is carried out by the curator under the

supervision of the supervisory judge as referred to in

Article 1 paragraph 1 of Law Number 37 Year 2004

concerning Bankruptcy.

4 CONCLUSIONS

Credit agreement with personal guarantee at Bank X

Medan branch is an accessory agreement. The

purpose and content of the coverage is to provide a

guarantee for the fulfillment of the principal

agreement and the existence of the coverage in

relation to the main agreement serving the principle

agreement. Settlement of non-performing loans with

individual guarantees is carried out by Bank X's

Medan branch, namely prioritizing deliberative

settlement and if the debtor is still not willing to pay

Legal Position Agreement with Personal Guarantee at Bank Medan Branch

415

off his debt by deliberation, the bank's last step is to

take legal action by implementing debtor guarantees.

If the debtor's guarantee is insufficient to pay off his

debt to the bank, the bank will hold the guarantor

accountable.

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