Personal Guarantees

Personal Guarantees and how to challenge them….

What are they?

Personal guarantees are quite simply a commitment by an individual to pay a lender a debt if the original borrower does not pay.
They are commonly sought by banks lending to small companies with limited assets but are also used in a wide range of other business situations; for example by builders merchants who grant running accounts.
Personal Guarantees do not have to be in any set form and it is not uncommon for people to give a guarantee without realising they have done so.

What are the consequences?

Trading through a limited company protects directors of personal assets if the business fails. If however they have given a personal guarantee and it is called on they open up all their personal assets to be available to meet a claim by a creditor.

What can I do if my guarantee is called on?

On the face of it a standard form of guarantee carries very clear consequences. If the borrower doesn’t’ pay then the guarantee does.
However in reality the position is very different. The law surrounding guarantees is complex and opens up a whole range of opportunities for the guarantor to avoid meeting the claim.

What we do?

We have wide experience of challenging guarantees in a whole range of business situations. Quite simply, no guarantor we have advised has ever paid the guaranteed debt in full and in many cases they have been able to avoid making any payment at all.

What should you do?

If you have given a guarantee and it is called on do not respond to the creditor in any way. Instead, contact us. We will give you a full evaluation of your position and handle all dealings with the creditor.

Contact – chris@tourmaletconsulting.com