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Most Businesses will accept financially distressed customers provided a Guarantor or Co-Signer also signs the contract. This is extremely comforting but it doesn’t always work out well.

The problem may be that the Contract is inadequate to insure payment. You need to get an agreement that the Guarantor will pay all debts regardless of the circumstances. Anything less could leave you in a vulnerable position. With the Guarantor escaping part or all of the debt.

You also need to be certain that all of the information provided by the Guarantor is clear and confirmed. You need to find somebody before you can sue them.

Finally, you must be able to prove beyond a reasonable doubt that the Guarantor is exactly the person who signed the document. Forgeries are not uncommon and misleading information may be provided either intentionally or through sloppy handwriting. Either way you lose.

You need enough information to prove in a Court of Law that the specific person who signed you Contract is the exact person you are litigating for full payment. You need to be ready to counteract identity theft claims, mistaken relative claims and ‘I don’t live there’ claims.

This article will address 5 clauses you need to have in your contract to make sure you have the best chance of getting paid if the original signer defaults. Before we start, however, you need to be aware of the limits attached by each State to any court action.

Every State has a Statute of Limitation and you cannot litigate for any claim older than that time period. This includes not only the original signer but also the Guarantor. If you wait too long you lose everything.

OK, now to what you need in a good personal guarantee.

1.The signature of the Guarantor should be personal, with no indication of corporate affiliation or business title. It should include the Physical Home Address of the Co-Signer, date of birth and Social Security Number. The signature should be notarized and you should obtain a copy of a photo ID. Identity theft is a common plea for Co-Signers who change their mind about supporting the Original Signer. You should make sure all items are filled in and are clearly legible. Some Guarantors intentionally provide inaccurate or missing information as a way out when needed.

2.The contract should be inclusive of any debt relating to your business relationship, including that which exists prior to the signing. If should also note that it is a contract guaranteeing payment of the full debt owed. The debt clause should include debt created if you need to employ a Debt Collection service or Attorney as a means of collecting the debt.

3.Safeguard your Guarantee by including a clause clearly stating the contract cannot be canceled except through your expressed written consent as long as the original signer continues to owe your Company money.

4.You should also specify that you don’t have to notify the Guarantor or, for that matter, do anything, before proceeding with Debt Collection or Litigation. A claim that the Guarantor was not notified can slow down the collection process and may lead to an unwanted settlement with Debt Collection or Litigation.

5.You can make sure your Contract will work even if the Guarantor dies or becomes incompetent by specifically binding any successors. This happens occasionally, especially if the Guarantor is old or the contract is expected to be valid for a long time.

Finally, the best personal guarantees are separate documents, not connected to any other document regarding the relationship between you and your customer. This will keep them from conflicting with items in the general contract that may be contrary to what is said in the Guarantor Contract.

Don’t worry about somebody choosing not to sign. If they are committed to the customer they will sign. If they want a weaker document they will be looking for a way out.

Do it the right way. It’s good for your sleep.


Executive Credit Management is a full-service Debt Collection and Applicant Screening agency with over 20 years’ experience located in Central New Jersey. We provide excellent service in the following areas: Employment Screening, Business Screening, and Tenant Screening. Executive Credit Management belongs to a number of Skip Tracing databases and offers services to help locate and confirm the current address of missing debtors. Other services provided are: litigation evaluation on all lawsuit decisions, improvement of the quality of the applicant data, Lawsuit Monitoring, Handling of Debtor Disputes. Executive Credit Management features the best Call Monitoring System in the Debt Collection industry.