Sued on a Personal Guarantee in New York?

When a business debt goes unpaid, the lender usually sues the owner who signed the personal guarantee too. What that means for you and what you can do.

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What a Personal Guarantee Is.

A personal guarantee is your promise to pay a business debt if the business does not. Under General Obligations Law 5-701(a)(2), a special promise to answer for the debt of another must be in writing and signed by the person to be charged. Leases, bank loans, equipment financing, supplier accounts, and merchant cash advances commonly require one.

How Lenders Sue on a Guarantee.

Most guarantee claims are filed with a suit against the business. Some lenders use CPLR 3213, which allows an action based on an instrument for the payment of money only to begin with a motion for summary judgment instead of a complaint. If you receive a summons with a notice of motion, the response date is set in the notice of motion. Read it carefully, because it may be sooner than you expect.

If you were sued as an individual for nonpayment of a contractual obligation, CPLR 3215(g)(3) requires the plaintiff, before taking a default judgment for nonappearance, to mail an additional copy of the summons to your residence at least 20 days before judgment is entered.

Defenses That May Apply.

Did you sign it, and what did you sign?

The guarantee must be in writing and signed by you. Its terms decide what it covers: some are capped, some cover only certain obligations, and some end on a date or event.

Is the underlying debt actually owed?

The amount claimed against the business is often the starting point for the claim against you. Payments, credits, and disputes about the debt itself can matter.

Waivers.

Many guarantees are written as absolute and unconditional and waive most defenses, and New York courts often enforce those waivers. That narrows the defenses but does not always eliminate them, and the exact language matters.

Your Personal Exposure.

A judgment on a guarantee is a judgment against you personally, not just the business. That is why the deadline matters as much for the guarantor as for the company. See what to do in the first 20 days.

Frequently Asked Questions

Does a personal guarantee have to be in writing in New York?

Yes. General Obligations Law 5-701(a)(2) requires a special promise to answer for the debt of another to be in writing and signed by the person to be charged.

Why did I receive a motion for summary judgment instead of a complaint?

CPLR 3213 allows a plaintiff suing on an instrument for the payment of money only to start the case with a motion for summary judgment in lieu of a complaint. The response date is set in the notice of motion.

Can I be sued personally if the business owes the money?

If you signed a personal guarantee, yes. The guarantee's terms decide what you are responsible for.

Are defenses waived in an absolute and unconditional guarantee?

Many defenses are waived by that language, and New York courts often enforce such waivers, but the exact terms of the guarantee and the facts still matter.

Why the Courtroom Matters.

I have practiced in New York for 28 years, and my office is in New York Supreme Court every week, in all five boroughs and in Nassau, Suffolk, and Westchester. I know how the parts run and what the judges expect, and that shapes every paper and every conversation about settlement from the first day.

When you contact me, I run a conflict check first. If I can take the case, I will tell you plainly where things stand, what the deadlines are, and what it will take.