Personal guarantees are becoming increasingly popular with creditors. Many are entered into without the individuals seeking independent legal advice on their implications.
Most banks will insist on such guarantees prior to providing trading facilities. When a company becomes insolvent, it is usual practice for the bank to demand full repayment of the guaranteed debt from the individual.
Landlords of commercial buildings often require guarantees to be provided. They should be entered into with great care. Leases often provide for dilapidations and future rent payments, and could lead to significant liabilities.
If guarantees are unavoidable, they should be entered into for a fixed amount over a fixed period of time.