Final answer:
The statement is false, as there are circumstances such as a strong payment history, negotiation for release, or through collateral seizure, in which a cosigner or guarantor may be released from a guaranteed loan liability before it is paid in full.
Step-by-step explanation:
The statement that an individual who is obligated on a guaranteed loan can only be released of liability when their loan is paid in full is false. While it is true that the primary condition for release from a loan is its full repayment, there are other circumstances under which a person can be released from liability prior to full payment. Specifically, if an individual is a cosigner on a loan, they have legally pledged to repay the loan if the original borrower defaults. However, the lender may release the cosigner from the obligation if the primary borrower demonstrates a strong payment history, or if the cosigner negotiates a release, possibly by providing a substitute cosigner. Furthermore, if the loan was secured with collateral, the bank can also recover the funds by seizing and selling the collateral without further recourse to the guarantor or cosigner.