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Personal Evaluation: Do you know what it is?

What is a personal guarantee?

A personal guarantee is a guarantee of obligations provided by the person who places his signature on the back of a bill of exchange or promissory note.

What is a personal guarantee?

The guarantor is the one providing the personal guarantee. He is the one who becomes responsible for the debt observance in the same terms as the main debtor, who is guaranteed by him.

In other words, if the guaranteed debtor defaults on his obligation, the creditor can enforce the assets of the guarantor.

In practical life, the most common case is that of a partner and/or director of a company who signs a credit agreement with a bank on behalf of the company, by means of a promissory note.

On the back of the promissory note, the partner and/or director affixes his or her signature, thus terminating the personal guarantee and guaranteeing payment of the company’s debt in the event of default.

If the guaranteed company defaults on the promissory note, the Bank may initiate an action for forced collection of the debt against the partner and/or director who provided the personal guarantee.

Speed of collection:

It should be noted that the creditor is exempt from filing a declaratory action for acknowledgement of its credit and may immediately proceed to enforcement action and, consequently, to the attachment of the assets and/or income of the guarantor.

In fact, negotiable instruments – bank drafts and promissory notes – are enforceable instruments.

Autonomy of the aval:

The personal guarantee remains valid and completely efficient even if the underlying contract of the guarantor is null and void due to any vice other than the non-observance of legal form.

Limited accessoriness:

The position of the guarantor is only ancillary vis-à-vis the position of the guarantor with regard to limitation periods and the loss of the right of action for failure to protest.

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