Personal guarantees if your company fails

A personal guarantee is a promise by a director, given to a lender, landlord or supplier, to repay a company debt personally if the company cannot. Banks, asset finance providers, commercial landlords and some trade suppliers commonly require them. While the company is trading the guarantee usually lies dormant, but if the company fails and the debt is unpaid, the creditor can pursue you personally for the guaranteed amount, which can put personal assets, including your home if it was used as security, at risk. The first step if your company is in difficulty is to find every guarantee you have signed and work out the total exposure, because directors are frequently surprised by how much they have guaranteed across different agreements. The good news is that guaranteed amounts are often negotiable once the company enters a formal process, and a practitioner or specialist adviser can help you deal with guarantees as part of the wider plan rather than in a panic. Insolvency Service; UK Finance guidance

Key facts

What it is: Your personal promise to repay a company debt if it cannot
Common with: Banks, asset finance, landlords, some suppliers
The risk: Personal liability, and assets used as security, if the company fails
First step: Find every guarantee and total your real exposure

Total your exposure first

Directors routinely underestimate how much they have personally guaranteed across loans, leases and supplier accounts. Our personal guarantee exposure checker helps you add it up. Once a company enters a formal process, guaranteed amounts can often be negotiated, so do not assume the headline figure is what you will pay.

Common questions

Will I have to pay a personal guarantee if my company is liquidated?

If the guaranteed debt is unpaid after liquidation, the creditor can pursue you personally. But the amount is often negotiable, and there may be defences, so take advice before agreeing to pay.

Can I lose my home over a personal guarantee?

Only if your home was specifically used as security for the guarantee, or a creditor obtains a charge through court. Many guarantees are unsecured. Check exactly what you signed and take advice.

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Personal guarantees if your company fails. A personal guarantee is a promise by a director, given to a lender, landlord or supplier, to repay a company debt personally if the company cannot. Banks, asset finance providers, commercial landlords and some trade suppliers commonly require them. While the company is trading the guarantee usually lies dormant, but if the company fails and the debt is unpaid, the creditor can pursue you personally for the guaranteed amount, which can put personal assets, including your home if it was used as security, at risk. The first step if your company is in difficulty is to find every guarantee you have signed and work out the total exposure, because directors are frequently surprised by how much they have guaranteed across different agreements. The good news is that guaranteed amounts are often negotiable once the company enters a formal process, and a practitioner or specialist adviser can help you deal with guarantees as part of the wider plan rather than in a panic.

Speak to a Licensed Insolvency Practitioner

Tell us briefly what is happening and we will arrange a free, confidential, no obligation call with a Licensed Insolvency Practitioner. The earlier you get advice, the more options you usually have.

Free, confidential and no obligation. We are an independent information service and introduce directors to a Licensed Insolvency Practitioner. This is general information, not regulated advice.