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Personal guarantees

Asked about 4 years ago - Charlotte, NC

I have a question regarding an officer of the company who signed a personal guarantee for various pieces of equipment and machinery. He has since left the company and his personal guarantees are still intact. What would happen if we could no longer make these payments?

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Attorney answers (2)

Lawrence Neil Rogak

Reputation Level 13

Answered about 4 years ago. Insurance Law Lawyer in Rockville Centre, NY.

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The answer depends in part on what kind of arrangements the company made with this former officer when he left. It's hard to believe he left the company without coming to some sort of deal with the company about what his obligations would be with regard to the personal guarantees. While it's impossible to give you a very detailed answer without knowing more facts, it is very likely that if the company could no longer make payments, the creditors would pursue this former officer to collect on the personal guarantees.

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Clifford L. Tuttle Jr.

Reputation Level 14

Answered about 4 years ago. Landlord / Tenant Lawyer in Pittsburgh, PA.

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A guaranty is given to the lender as additional security for the loan. The borrowing company may not be able to (or not wish to) persuade the lender to forgive the guaranty or substitute that of another party. If you personally are the guarantor, be aware that you have a right to receive copies of the guaranty and related instruments (such as confession of judgment warrants and affidavits) and you should be familiar with its terms. Do not respond to any post-default demand by the lender for payment without consulting a lawyer in your jurisdiction who has experience in this area. Do not give written consent to any modifications or refinance of the debt without advice of such counsel, either. Any change to the underlying debt, made without your written consent, may release you from your guaranty forever. If the maker files bankruptcy, consult a lawyer with expertise in that area in your jurisdiction. And if the lender attempts to confess judgment against you, find a qualified attorney in your jurisdiction to represent you before the day is over.

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