A personal guarantee form outlines a third-parties intent to take responsibility for another person's debt when that person has difficulty fulfilling his obligation to the debt, according to Legal Dictionary. The guarantor is legally obligated to fulfill the debt if the original debtor defaults.Continue Reading
A guarantor is essentially a co-signer, as he pledges his own personal resources or assets, as noted by Investopedia. If the debtor fulfills his obligations under the contract, the guarantor is released from his responsibility. The use of a guarantor is common in personal loans when the borrower does not have a credit history or has poor credit. A guarantee form is the equivalent of a signed blank check, and the obligee is usually not required to go after the obligor's assets before going after the guarantor's assets. The lender generally determines whose assets are easier to gain control of and liquidate. The obligee is the only party that can cancel a personal guarantee, the Business Dictionary explains.
Small-business owners are sometimes asked to sign a personal guarantee form when borrowing money, according to Nolo. If the business somehow defaults on any financial obligation, the lender can go after the personal assets of the business owner.Learn more about Business Communications