Business Advice
5 Ways To Reduce Your Exposure Under A Personal Guarantee
One of the many formal and financial agreements or contracts you can be a party to as a company director is a personal guarantee, and it is a commitment that you should always seek guidance about from your commercial lawyers. This is especially the case because agreeing to a personal guarantee can place a huge legal and financial burden upon yourself, and it is a burden that can have huge financial implications for you and your family
For those who may never have come across a personal guarantee, they are an agreement by an induvial to guarantee to pay a debt of a third party. In the business world, the most common example is a company director making a personal guarantee for a loan taken out by a business they own or for which they are a director.
Under a personal guarantee, your assets including your income, savings, stocks, shares, land, and property may all be liable to be used or liquidated to clear the debt in question, if the third party that owes it defaults. You also may want to speak to property lawyers about your land and property involved.
Given the significant impact a personal guarantee can have on your finances, we repeat that if ever you are considering entering such an agreement that you seek advice from a commercial lawyer. In addition, there are several ways in which you can reduce your exposure under a personal guarantee before you sign it. Here are five of those ways.