The Value of a Personal Guarantee
From time to time, we get questions from our clients about personal guarantees. They will want to discuss issues such as:
- Under what circumstances should a personal guarantee be obtained?
- Will their version stand up in a court of law?
- What verbiage in a personal guarantee is preferable?
- What is the advantage to having one?
Recently, one of the New York collection attorneys we use wrote an article that was published in Commercial Law World, the official publication of the Commercial Law League of America. The CLLA, as it is known, is an organization made up of attorneys, agencies, and other experts in credit, finance, commercial law and bankruptcy.
CST Company has been sending accounts to attorney Murray S. Lubitz for over 15 years. He has always done an outstanding job for us and our clients. Click here to read his article,"Personal Guarantees: How helpful are they?"
When Mr. Lubitz drafted the article, he did so specifically with the credit manager in mind. It was his intent to give practical advice to credit managers, based upon his years of experience litigating matters involving personal guarantees. His article contains a number of practical suggestions aimed at credit personnel, to insure that the personal guarantees they utilize will be looked upon favorably by the courts.
We think many of you will find this article to be interesting and helpful. Of course, bear in mind that many states may have their own rules regarding whether or not a personal guarantee is enforceable. If in doubt, it may be advisable to seek the opinion of either your in-house counsel or that of an attorney in the state where your guarantor resides.
CST Company has a standard personal guaranty form. Contact CST Company or your local representative to obtain a copy of our form, or for additional information.