--- title: "Businesses Seeking to Collect Debts: Don’t Forget About Personal Guaranties" description: "Businesses Seeking to Collect Debts: Don’t Forget About Personal Guaranties" --- [![Goosman Lawfirm](https://blog.goosmannlaw.com/hs-fs/hubfs/Goosmannlaw%20October2017/images/Goosmann_Law_Firm_logo_4C-white.png?width=1250&name=Goosmann_Law_Firm_logo_4C-white.png "Goosman Lawfirm")](http://goosmannlaw.com/) - [COVID-19 Toolbox](https://goosmannlaw.com/covid-19-resource-toolbox/) - Our Team - [Attorneys](https://goosmannlaw.com/attorneys/) - [Non-Attorney Staff](https://http://goosmannlaw.com/non-attorney-staff/) - Practices & Industries - [Practices](https://goosmannlaw.com/practices/) - [Banking & Finance](https://goosmannlaw.com/banking-finance/) - [Bankruptcy, Restructuring & Workouts](https://goosmannlaw.com/bankruptcy-restructuring-workouts/) - [Business](https://goosmannlaw.com/business/) - [Divorce & Family Law](https://goosmannlaw.com/divorce-family-law/) - [Employment](https://goosmannlaw.com/employment-law/) - 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Businesses of all sizes, from small family-owned businesses to national or international corporations, contact me routinely when they are having trouble collecting debts. One of the first things I want to know is whether any individuals have signed a personal guaranty relative to the debt. What is a personal guaranty? Generally speaking, it’s a document signed by a person which obligates him or her to pay a corporate debt in the event the corporation fails to do so. Personal guaranties are signed frequently by owners of businesses who are seeking credit, whether through a monetary loan or perhaps credit vis-à-vis goods or services received in advance of payment. Without a personal guaranty, a debt collection action may be limited to efforts directed towards the debtor-corporation; if the corporation is judgment proof, you might end up “spending good money chasing bad money.” However, if the corporation’s owner has signed a personal guaranty, he or she cannot hide behind the corporate liability shield and can be sued personally. Therefore, it is vitally important that, when seeking to collect a debt, you investigate whether there are any applicable personal guaranties. It is equally important, when providing credit to a business, to consider whether you want to insist on a personal guaranty before providing such credit. 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