Personal guarantees
Personal Guarantee AdviceFind Out What You HaveActually Signed
Most directors know they have signed guarantees. Very few know how many, to whom, for how much, or what happens if the company fails. That gap is where the damage happens, and it takes one call to close it.
Free initial advice · Confidential · No obligation · Lines open 8am to 6pm · Independent advice for directors and investors
Personal guarantees explained
What signing a personal guarantee really means for a director, and what can be done about it.
The liability that survives the company
A personal guarantee is a separate contract between you and the lender. It does not sit inside the company and it does not disappear when the company does. Directors who discover this at the point of closure rather than beforehand have very few options left.
What this service is
A review of your personal guarantee exposure: what you have signed, with whom, for how much, whether the guarantee is capped or unlimited, whether it is supported by security over your home, and what the lender can realistically do.
We then work through the options, negotiation, restructuring, settlement, insurance where it exists, or planning the company's route so that the guarantee position is managed rather than triggered blindly.
Who it is for
Directors who have signed guarantees for bank facilities, asset finance, invoice discounting, commercial leases, trade supply accounts, equipment hire or merchant services, which, in practice, is the large majority of owner-managers.
It is particularly for directors approaching a closure or restructure, and for those who have already received a demand under a guarantee.
When it is needed
Before the company enters any formal process. That is the point at which the guarantee position can still influence the route chosen, and where negotiation with the lender has the most leverage.
It is also needed the moment a demand arrives. Guarantee demands carry deadlines, and the response made in the first fortnight tends to set the tone for everything that follows.
Why independent advice matters here
The lender holds the paperwork and the timetable, and its interest is straightforward: recovery. An insolvency practitioner acting in the company's liquidation is not your adviser on a personal contract you signed.
We act on behalf of directors and investors, which means the guarantee is looked at from your side: what it covers, what it does not, what has been assumed rather than verified, and what a realistic settlement looks like.
What is at stake under a personal guarantee
Guarantees are enforced against personal assets. The scale of that exposure depends entirely on terms most directors have never re-read since signing.
The family home
Where a guarantee is supported by a charge over property, the lender has security and can seek possession. Where it is not, they may still obtain a charging order after judgment.
Unlimited guarantees
Some guarantees are capped at a stated sum. Others cover all monies due, including interest, costs and facilities taken out long after the guarantee was signed.
Joint and several liability
Where several directors guaranteed the same facility, the lender can pursue any one of them for the whole amount and leave that director to chase the others.
Spousal guarantees
Where a spouse or partner also signed, the exposure extends to them and to jointly held assets.
Bankruptcy petitions
An unmet judgment on a guarantee can lead to a statutory demand and, ultimately, a bankruptcy petition against the director personally.
Guarantees you have forgotten
Supply accounts, equipment hire agreements and lease guarantees signed years ago frequently surface only when the company closes.
Mistakes we see directors make
- Assuming the guarantee ended when the facility was refinanced or the account was closed
- Not checking whether the guarantee is capped, and at what figure
- Ignoring a demand letter in the hope the lender turns to the company instead
- Agreeing a settlement figure on the telephone before the underlying claim has been verified
- Transferring the house into a spouse's name once trouble appears, which can be set aside
- Choosing a closure route without first establishing which guarantees it triggers
How we work with you
A defined sequence, so you always know what happens next and what is expected of you at each stage.
- 01
Free first call
We establish what you think you have signed and to whom. Guessing at this stage is fine; most directors start there.
- 02
Guarantees identified
We work through facilities, leases, finance agreements and supply accounts to build the actual list rather than the remembered one.
- 03
Terms reviewed
Cap or unlimited, security taken, joint and several, spousal exposure, and whether the guarantee is still live at all.
- 04
Options set out
Negotiation, structured settlement, restructuring the company's route, or a defended position where the claim is questionable.
- 05
Alongside you throughout
We stay involved through the company process and the lender conversations, so you are not managing both alone.
What you get out of it
You know the real number
Total guarantee exposure, quantified across every lender rather than estimated one facility at a time.
Closure planned around it
Knowing which guarantees a given route triggers changes which route makes sense. That is only useful before you commit.
Better settlements
Lenders negotiate. Directors who understand the terms, the security and the lender's realistic alternative settle on materially better figures.
Time to protect what matters
Early advice creates room to address property exposure legitimately, rather than through steps that are later set aside.
Immediate availability
Lines are open 8am to 6pm, seven days a week, which matters when a demand carries a fourteen-day deadline.
Confidential and independent
Nothing is disclosed and no lender is contacted on your behalf without your instruction.
Personal guarantees in detail
Guarantees vary enormously in scope. Two directors with apparently similar facilities can have completely different exposure depending on wording signed years apart.
Where guarantees typically hide
We work through each of these categories, because directors reliably remember the bank one and forget the rest.
- Bank overdrafts, loans and commercial mortgages
- Asset finance and hire purchase on vehicles, plant and equipment
- Invoice discounting and factoring facilities, often with a warranty as well as a guarantee
- Commercial property leases, where the landlord holds an author's guarantee or a rent deposit
- Trade supply accounts, particularly builders' merchants and wholesalers
- Merchant services, fuel cards, equipment hire and utility contracts
Terms that determine your exposure
The three that matter most are whether the guarantee is capped, whether it is supported by security over property, and whether liability is joint and several.
An uncapped all-monies guarantee supported by a legal charge over the family home, signed jointly with a spouse, is a fundamentally different proposition from a capped £25,000 guarantee with no security. Both are called personal guarantees; only one puts the house at risk directly.
What happens when the company fails
The lender first looks to the company and any security it holds over company assets. Where a shortfall remains, the guarantee is called and a formal demand is issued, usually with a short deadline.
If the demand is not met, the lender can obtain judgment, then enforce through charging orders, attachment of earnings or, for larger sums, a statutory demand followed by a bankruptcy petition. Each stage adds cost, which is why the first fortnight after a demand matters disproportionately.
Negotiating a settlement
Lenders routinely accept less than the full amount where full recovery is uncertain, slow or expensive. What moves the figure is credible information: a clear picture of your actual assets and income, an honest position on what can be paid, and a comparison with what the lender would realistically achieve by enforcing.
Lump-sum settlements, instalment arrangements and combinations of both are all common outcomes. What is not helpful is agreeing a number under pressure before the claim itself has been checked.
Planning the company route around guarantees
Guarantee exposure should shape the company decision, not follow it. Where a viable trade can be preserved through restructuring, the guaranteed facility may be able to continue rather than crystallise. Where closure is unavoidable, the order and timing of steps still affects the lender's position and therefore the negotiation.
In our Northampton fencing and groundwork case there were no personal guarantees in play, which widened the options considerably. Establishing that fact early is precisely why the review is worth doing before anything else is decided.
Where we advise
Offices near Alton in Hampshire and in Manchester, Leeds, Bradford and Birmingham, with our registered office in Northampton. We advise directors nationwide, by phone and video and in person where that is easier.
Questions directors ask us about this
Does a personal guarantee end when the company is liquidated?
No. It is a separate contract between you and the lender. Liquidating the company generally triggers the guarantee rather than extinguishing it.
Can they take my house?
Where the guarantee is supported by a legal charge over the property, the lender has security and can seek possession. Without a charge, they would need judgment first and could then apply for a charging order. Establishing which situation applies to you is one of the first things we check.
I do not know how many guarantees I have signed. Can you help?
Yes, and that is a very common starting point. We work through facilities, leases, finance agreements and supply accounts to build the actual list rather than relying on recollection.
Can a personal guarantee be negotiated?
Frequently. Lenders settle for less than the full sum where recovery is uncertain, slow or costly. The outcome depends on credible information and a realistic proposal, which is what we help you put together.
What should I do if I have received a demand?
Call before responding. Demands carry short deadlines and the initial response tends to shape the whole negotiation. Do not agree a figure on the telephone before the claim has been verified.
Can I transfer my house to my spouse to protect it?
Transfers made once difficulty is foreseeable can be challenged and set aside as transactions defrauding creditors, and doing so can worsen your position considerably. Take advice before making any transfer.
What if several directors signed the same guarantee?
Where liability is joint and several, the lender can pursue any one guarantor for the entire amount, leaving that person to seek contributions from the others. This is worth knowing before you assume the exposure is shared equally.
Is the initial advice free?
Yes, free, confidential and with no obligation.
Are you insolvency practitioners?
No. We are a director advisory firm acting for directors and investors, holding no insolvency licences. Where a formal process is needed we introduce you to licensed practitioners and stay alongside you throughout.
Do you cover my area?
We advise nationwide, with offices near Alton in Hampshire and in Manchester, Leeds, Bradford and Birmingham, and a registered office in Northampton.
Still not sure it applies to you?
Describe the situation in one call. If this is not the right service for you, we will say so and point you to the one that is.
0330 223 5754Free · Confidential · No obligation · Lines open 8am to 6pm, 7 days a week
Find out what you are actually liable for
A free, confidential call establishes your real guarantee exposure and what can be done about it, before a demand arrives and the timetable stops being yours.
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