A personal guarantee can convert an uncollectible corporate debt into a claim against an individual. After default, enforcement requires proof of the guarantee, proof of the underlying debt, and timely pursuit of available guarantor assets. The sequence matters: a missed procedural step can narrow or defeat liability.
A personal guarantee is a promise on paper until it is tested. Most guarantors sign without hesitation as corporate formalities require it, and the business appears stable. Default changes the calculus. The corporate debtor is undercapitalized or dissolved, the account is aging past 120 days, and the guarantee may be the remaining path with value. Enforcement is not automatic. It requires documentation, any required notice, and a decision tree that differs from collecting against the original borrower. The guarantee was signed to unlock credit. Now it must unlock recovery.
Personal guarantees bind an individual to a corporate obligation. They exist because creditors understand that limited liability shields owners from business debts unless the owners agree otherwise. The guarantee waives that shield. It makes the individual jointly and severally liable, which means the creditor may pursue the guarantor without exhausting remedies against the corporation first if the document permits that posture. That optionality is the instrument’s value. It is also the source of most disputes.
What the Guarantee Permits After Default
Once default occurs, typically defined in the underlying agreement as nonpayment, breach, or insolvency, the creditor may invoke the guarantee. What follows depends on the guarantee’s terms. An unlimited guarantee covers the full debt, including principal, interest, attorney fees, and costs if the document provides for those categories. A limited guarantee caps liability at a stated amount or a percentage of the debt. Some guarantees are unconditional; others require the creditor to demand payment from the corporate debtor first. The distinction is not academic. Conditional guarantees require proof of the triggering event. Unconditional guarantees generally do not.
Florida law treats guarantees as contracts. Enforcement begins with reading the document as written. Courts will not rewrite clear terms to favor the guarantor. If the guarantee says “unconditional and absolute,” the guarantor cannot later claim the creditor failed to exhaust corporate assets. The language binds. The guarantor’s subjective intent, what they believed they were signing, does not control. The objective meaning of the text does.
Consider a hypothetical: A supplier extends $200,000 in net-30 credit to a limited liability company. The managing member signs a personal guarantee with no cap and no conditions. The LLC stops paying after four invoices. The supplier may proceed directly against the guarantor without filing suit against the LLC, without liquidating the LLC’s remaining assets, and without waiting for the LLC to formally dissolve. The guarantee permits all of that. It also permits the supplier to sue both the LLC and the guarantor in a single action, which preserves claims against both obligors and avoids duplicative litigation.
Proof Required to Enforce the Guarantee
Enforcement of a personal guarantee in Florida requires the creditor to prove the written guarantee, default under the underlying obligation, the guarantor’s obligation to pay under the guarantee’s terms, and damages. Each element demands documentation.
- Execution of the guarantee: The creditor must produce the signed guarantee or admissible evidence of its terms. A copy is generally sufficient unless the guarantor properly raises a dispute over authenticity or alteration.
- Default by the primary obligor: The creditor must establish that the underlying debt is due and unpaid. This typically requires invoices, account statements, and proof of delivery or performance.
- Amount owed: The creditor must calculate the debt according to the terms of the guarantee and the underlying agreement, including any contractual interest, late fees, or attorney fees if the guarantee permits recovery of those items.
Guarantors often defend by challenging one of these elements. Common defenses include claims that the guarantee was procured by fraud, that the creditor materially altered the underlying obligation without the guarantor’s consent, or that the debt has been paid or discharged. Fraud defenses must be pleaded with particularity, and the guarantor must ultimately prove the required elements, including reliance. General claims of misunderstanding do not suffice.
Another defense arises when the creditor releases collateral or settles with the corporate debtor in a way that impairs the guarantor’s subrogation rights. If the creditor agrees to release a security interest in exchange for partial payment from the corporate debtor, and that release diminishes the guarantor’s ability to recover from the corporation after paying the creditor, the guarantor may be discharged to the extent of the impairment. This defense is narrow—it does not apply when the guarantee contains a waiver of subrogation and impairment defenses, which most institutional guarantees do.
Filing Suit Against the Guarantor
Litigation against a guarantor follows the same procedural path as any breach-of-contract action in Florida. The creditor files a complaint in circuit court, alleging execution of the guarantee, default, the guarantor’s liability, and damages. The complaint should attach the guarantee as an exhibit and plead the underlying debt with specificity. Service of process on the guarantor must comply with Florida Rule of Civil Procedure 1.070. Personal service is preferred; substituted service requires strict compliance with statutory notice requirements.
If the guarantor does not respond within 20 days, the creditor may move for default judgment. The motion must include an affidavit establishing the amount due and attaching the guarantee and proof of debt. Florida courts will not enter a default judgment for an unliquidated amount without an evidentiary hearing, but when the debt is a sum certain—invoices for delivered goods, for example—the judgment may be entered on affidavit alone.
When the guarantor does respond, discovery becomes the next checkpoint. The creditor should serve requests for admissions on execution of the guarantee, receipt of goods or services, and nonpayment. Admissions narrow the issues and avoid the need to prove uncontested facts at trial. Interrogatories and document requests should target the debt calculation, payments, offsets, collateral, and asserted defenses. Broad asset discovery is usually sequenced after judgment unless the assets are independently relevant to a pleaded claim or defense. A deposition of the guarantor locks in testimony and forecloses later shifts in the defense narrative.
Many guarantee disputes are resolved on summary judgment. When the guarantee is unconditional, the debt is documented, and the guarantor has no genuine issue of material fact to support an affirmative defense, the creditor is positioned to seek judgment as a matter of law. The motion should be supported by affidavits authenticating the guarantee, invoices, and account statements, and by a legal memorandum showing that no disputed fact remains. If the guarantor’s response relies on conclusory denials or unsupported claims of duress or fraud, summary judgment may be appropriate. For creditors seeking efficient resolution before trial costs compound, this is often the critical juncture.
Post-Judgment Enforcement Against Guarantor Assets
A judgment against a guarantor is only as valuable as the assets available to satisfy it. Florida provides several post-judgment remedies, each with its own procedural requirements and exemptions. The creditor’s choice of remedy depends on the type of assets the guarantor holds and the guarantor’s cooperation—or lack of it.
Wage garnishment under Florida Statute § 77.0305 permits the creditor to intercept a portion of the guarantor’s earnings after judgment. For nonexempt wages, withholding generally is limited to the lesser of 25% of disposable earnings or the amount by which disposable earnings exceed 30 times the federal minimum wage per week. The employer answers under oath, and payments are remitted to the creditor until the judgment is satisfied. Garnishment is subject to the head of family exemption under Florida Statute § 222.11, which protects qualifying earnings of a person who provides more than half the support for a child or other dependent. The exemption must be claimed in the garnishment process, and the claim may be contested.
Bank account garnishment is governed by the same garnishment chapter but applies to funds held in deposit accounts. The creditor serves the writ on the bank, which freezes the account and answers regarding the balance on the date of service. Funds are then turned over to the creditor unless the guarantor files a claim of exemption. Common exemptions include Social Security benefits, certain retirement accounts, and traceable head of family wages for the statutory period. Timing is critical: account balances fluctuate, and garnishment reaches only what is on deposit at the moment the writ is served.
If the guarantor owns real property, the creditor may record a judgment lien. In Florida, a certified copy of the judgment is recorded in the public records of the county where the property is located. The lien attaches to non-exempt real property and remains effective for ten years, with a possible additional ten-year extension if the judgment is timely rerecorded in compliance with Florida Statute § 55.10. The lien does not provide immediate recovery—it prevents the guarantor from selling or refinancing without addressing the judgment. If the guarantor attempts a sale, the creditor is paid from the proceeds at closing. If the guarantor does not sell, the creditor may foreclose on the lien, though foreclosure is procedurally intensive and typically reserved for high-value judgments.
Execution on personal property (vehicles, equipment, inventory, etc.) is less common but available under Florida Statute § 56.21. The creditor obtains a writ of execution, and the sheriff levies on tangible assets. The assets are sold at public sale, and the proceeds are applied to the judgment. Personal property execution is subject to exemptions, including a $1,000 exemption for personal property and, for individuals who do not claim or receive the benefit of a homestead exemption, an additional $4,000 exemption under Florida Statute § 222.25. Execution is most effective when the guarantor operates a business with valuable equipment or inventory that is not encumbered by a senior secured creditor.
Post-judgment discovery under Florida Rule of Civil Procedure 1.560 permits the creditor to examine the guarantor regarding assets, income, and transfers. The creditor may require attendance and document production through the ordinary discovery tools, subpoenas, and court orders. Refusal to appear or to answer may result in contempt if a court order has been violated. Post-judgment discovery is not itself a collection remedy, but it reveals assets that may then be reached through garnishment, execution, or lien foreclosure. It also creates a record that may support proceedings supplementary under Florida Statute § 56.29 or a fraudulent transfer claim if the guarantor moved assets to avoid the judgment. Understanding the guarantor’s financial position is often the necessary prelude to meaningful recovery after default.
Personal guarantees are instruments of conversion: they turn a limited liability problem into an individual recovery opportunity. But they do not enforce themselves. The creditor who waits, who relies on informal assurances from the guarantor, or who files suit without the documentation to support summary judgment will find that the guarantee’s theoretical value exceeds its realized recovery. Enforcement is a matter of sequence, proof, and persistence. Each procedural checkpoint, notice if required, pleading, discovery, judgment entry, and post-judgment pursuit, must be navigated with the understanding that guarantors who sign willingly often defend actively. The creditor who treats the guarantee as a backup plan discovers, too late, that it required a primary strategy.
Closing Remarks
If a guarantor has stopped responding after corporate default, if the underlying debt exceeds the cost of enforcement, or if post-judgment collection has stalled because the guarantor’s asset profile is unclear, the timing should be evaluated before asset movement complicates recovery. Kass Shuler enforces personal guarantees in Florida commercial debt matters, from demand through judgment to post-judgment asset recovery. Contact us to position the claim before the guarantor repositions the assets.
Frequently Asked Questions
Can a creditor sue the guarantor without first suing the corporate debtor?
Yes, if the guarantee is unconditional. Most institutional guarantees permit the creditor to proceed directly against the guarantor without exhausting remedies against the corporation. Conditional guarantees, which require the creditor to demand payment from the primary obligor first, are less common in commercial transactions. The guarantee’s language controls. If it states that liability is joint and several and makes no reference to prior demand or suit against the corporation, the creditor may choose its target.
What happens if the guarantor claims the signature was forged or unauthorized?
The guarantor must properly raise forgery or lack of authority. A bare unsworn denial is not enough when the action is founded on a written instrument; Florida Rule of Civil Procedure 1.130 requires a party contesting genuineness to do so specifically and under oath. Once the issue is properly raised, the creditor should be prepared to prove execution through admissible evidence, including witness testimony, notarial evidence, business records, or signature exemplars. If the creditor’s copy of the guarantee includes a notarized acknowledgment, the creditor has a stronger evidentiary position, but the issue should still be developed promptly through discovery.
Does the guarantor’s bankruptcy discharge the guarantee?
Generally, yes, unless the debt is nondischargeable under federal bankruptcy law or the creditor obtains a reaffirmation agreement. When a guarantor files for bankruptcy protection, the automatic stay halts collection efforts, including litigation and post-judgment enforcement. If the creditor does not file a proof of claim when required or does not timely object to dischargeability when grounds exist, the debt may be eliminated as to that guarantor. The creditor’s recourse shifts to the corporate debtor or to any co-guarantors not in bankruptcy. If the guarantor files Chapter 7, the discharge is typically final. If the guarantor files Chapter 13, the creditor may receive partial payment through the plan. Guarantors in bankruptcy require bankruptcy counsel; creditors attempting to continue collection in violation of the stay risk sanctions.
How long does a judgment against a guarantor remain enforceable in Florida?
A Florida judgment is enforceable for 20 years from the date of entry under Florida Statute § 55.081. A creditor seeking to extend the enforceable life of the obligation should evaluate a timely action on the judgment before the original judgment expires. During the 20-year period, the creditor may execute on assets, garnish wages and accounts, and record liens on real property. Post-judgment interest accrues at the rate set under Florida Statute § 55.03. The judgment lien on real property, however, is effective for only 10 years unless extended by timely rerecording under Florida Statute § 55.10. Creditors should calendar the lien extension date to preserve the encumbrance.
Can the creditor recover attorney fees from the guarantor?
Only if a contract or statute permits fee recovery. Florida follows the American Rule: each party bears its own attorney fees unless an exception applies. Most commercial guarantees include a fee-shifting provision stating that the guarantor will pay the creditor’s reasonable attorney fees and costs incurred in enforcement. If the guarantee is silent, the creditor may have difficulty recovering fees unless the guarantee clearly incorporates or covers fee obligations in the underlying commercial agreement. When drafting or reviewing guarantees before extending credit, fee-shifting language should be express. After default, the creditor claiming fees must prove them with affidavit or testimony and must show that the fees were reasonable and necessary to the enforcement effort.
References
- Fla. Stat. § 77.0305
- Fla. Stat. § 222.11
- Fla. Stat. § 55.10
- Fla. Stat. § 56.21
- Fla. Stat. § 222.25
- Fla. Stat. § 56.29
- Fla. Stat. § 55.081
- Fla. Stat. § 55.03
