With economic times as they are and banks tightening up on their underwriting process, lenders are starting to require anyone who receives loan proceeds to execute a personal guaranty. A personal guarantee obligates the consumer to be personally responsible for repayment of the debt in the case of default, regardless of if the loan was for them, a business, or even another individual. The types of loans that almost always include personal guarantees are business loans and lines of credit, bank loans, student loans, property loans and even medical debt. In today's lending environment, it's almost impossible to not find a personal guarantee buried somewhere in the contract.

While Texas case law makes it seem easy to prove and win a personal guarantee case, there are still numerous defenses available to invalidate personal guarantees.

Chad Johnson Managing Partner

Often times credit card companies will make authorized users personal guarantors, even though they did not originally open the account or were not personally responsible. They do this by citing hidden language in the card member agreement. Many times these card member agreements are not even sent to the authorized user and therefore they have no knowledge of the level of financial responsibility they are taking on. In terms of credit reporting, the personal guarantors get severely mistreated. In a nutshell, the personal guarantor of the account receives no favorable reporting to his or her credit when the account is paid as promised. However, if the debt is not paid on time, then the personal guarantor suffers derogatory credit reporting and remarks, lowering their own personal score.

While Texas case law makes it seem easy to prove and win a personal guarantee case, there are still numerous defenses available to invalidate personal guarantees. For instance, the personal guarantee can be defective due to poor drafting. Banks and lenders usually have well-prepared forms, however many other businesses use canned or borrowed forms from the Internet for their documentation. These forms routinely misuse terminology, omit essential terms, or have other problems that can eliminate the effectiveness of the guaranty and liability of the guarantor. Texas courts routinely interpret personal guaranties strictly, meaning that any defect in the personal guaranty is likely to benefit the creditor, and may render the guaranty clause completely void.

Our attorneys will aggressively fight your bank or personal guaranty lender and force them to prove their lawsuit is valid in court. We will attack their case every step of the way and make them prove they are legally entitled to collect on the debt. You will find that your lender is suddenly much more willing to work with you once you have an actual attorney by your side. Ultimately, our firm will either force the bank or personal guaranty lender to dismiss their lawsuit, or negotiate a settlement of the outstanding loan amount at a substantial discount.

If you are facing a bank or personal guaranty lawsuit or other personal debt issues here in Texas, don't wait until it's too late. Contact the experienced debt relief attorneys of Johnson & Bryan today for a free evaluation of your case.

The information contained in this web page is for general information and educational purposes and is not legal advice. Reading these posts does not create an attorney / client relationship with the law firm of Johnson & Bryan.