When it comes to commercial collections, personal guarantees can be a powerful tool. But are they enforceable in Massachusetts?
At Law Offices of Alan M. Cohen & Associates LLC, our Massachusetts commercial litigation collections attorneys have more than 50 years of debt collection experience. They employ aggressive, innovative and relentless, but ethical, debt collection strategies to help their business clients get paid. Using methods available under state and federal laws, their impressive track record of successful commercial debt collection cases speaks to the effectiveness of their creative strategies.
What is a personal guarantee?
A personal guarantee is a commitment by an individual to repay a business debt if the business itself fails to do so. It’s a promise that adds a layer of security for creditors, ensuring that someone is on the hook for the debt, even if the company cannot pay. Under Massachusetts law, a personal guarantee is legally binding.
How is a personal guarantee used in commercial collections?
A personal guarantee can provide added layers of protection and security for businesses that extend credit to a company. A personal guarantee provides:
- Enhanced security: A personal guarantee shifts the risk from the business to the individual, providing creditors with a greater chance of recovering potential debt.
- Leverage: It can be a strong motivator for business owners to ensure their company meets its obligations.
- Broader reach: It allows creditors to pursue the individual’s personal assets, not just the business assets, in case of default.
At Law Offices of Alan M. Cohen & Associates LLC, our experienced commercial collections attorneys regularly encourage companies to secure a personal guarantee whenever possible.
The importance of properly executing a personal guarantee
There’s a catch to using a personal guarantee. A personal guarantee is only as good as its execution. Here’s why proper drafting and execution are crucial:
- Clarity: The terms of a personal guarantee must be clear and unambiguous.
- Witnessing and/or notarization: Proper witnessing and notarization can prevent disputes about the validity of the guarantee.
- Specificity: Clearly specify the obligations covered by the guarantee to avoid loopholes.
At Law Offices of Alan M. Cohen & Associates LLC, our seasoned commercial collections lawyers have more than five decades of experience. They regularly assist companies with drafting, executing, and enforcing personal guarantees. In addition, we adhere to the highest standards of ethics, ensuring that our methods are effective and above board.
Consult An Attorney About Your Personal Guarantee
Personal guarantees are enforceable in Massachusetts and can be a critical component of your debt collection strategy. When properly executed, they offer a robust layer of protection for your business. Don’t leave this to chance.
Let our experienced commercial litigation collections attorneys help you draft, execute, and enforce personal guarantees to ensure you get paid. Contact us today by calling our office at 508-763-6604 or sending an inquiry through our website to learn more or to schedule a consultation. We fight to get you paid.