In the dynamic and sometimes volatile world of business transactions, your company’s financial stability and success depend upon being able to promptly and efficiently collect monies that are owed. One important tool in a creditor’s arsenal is the personal guarantee. Understanding how personal guarantees function can be critical when it comes to safeguarding your receivables and ensuring the future success of your business.
At the Law Offices of Alan M. Cohen & Associates LLC, our commercial litigation attorneys have over five decades of collective experience and a track record of success with the relentless, effective, and ethical commercial debt collection. We also advise and assist companies with drafting documents and implementing practices that will help them to better secure their receivables.
What is a personal guarantee?
A personal guarantee is legally binding under Massachusetts Law, that agreement in which an individual promises to repay a business debt personally if the business cannot pay. When your company is working with a smaller or medium-sized business, a personal guarantee provides an extra layer of security for you as the creditor.
The significance of a personal guarantee in a business transaction
When a business owner is willing to sign a personal guarantee, they are personally promising to honor any future debts, no matter what happens with the success of their business. A personal guarantee is evidence that:
- A business owner has a strong commitment to honoring their business obligations
- A debtor is more likely to be prudent with their finances
- A debtor may be less likely to default on their debt
Personal guarantees foster business growth between both parties. It serves as a confidence booster for creditors by encouraging them to extend credit more freely.
A personal guarantee facilitates debt collection
In the event a debtor does default on a commercial debt, a personal guarantee will make it easier for your business to collect on the debt. With a personal guarantee, a creditor has additional avenues for collecting commercial debt, beyond the business assets of the company. An enforceable personal guarantee may provide you the creditor with a direct path toward a faster resolution.
How our experienced commercial litigation business collection lawyers can help you get paid
At the Law Offices of Alan M. Cohen & Associates LLC, our experienced commercial litigation business collection lawyers provide counsel and advice regarding the intricacies of business collections. Our lawyers can assist your company with preparing the documents and agreements for a personal guarantee. We can also facilitate debt collection, that is filing suit, when you have an enforceable personal guarantee (and even if you do not). A personal guarantee can be a strategic component in managing your company’s financial risk and can enhance your bad debt collection.
Schedule a consultation today
At the Law Offices of Alan M. Cohen & Associates LLC, we are available by appointment to discuss your commercial litigation business debt collection needs. To schedule an initial consultation, call our office at 508-763-6604 or send us an inquiry through our website.