PERSONAL CONTINUING GUARANTY

What is Guaranty in general?

Under the New Civil Code, by guaranty, a person called the guarantor, binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so.

Classification of Guaranty:1. Personal - The guaranty

given is the credit of a person who guarantees the fulfillment of the principal obligation.

2. Real - The guaranty given is property, movable or immovable.

PERSONAL GUARANTY In its broad sense, it is where a

third party guarantees the financial obligations of a person under a contract.

In lending, a Personal Guaranty is a guaranty in which an individual agrees to be responsible for the financial obligations of a debtor or borrower to a lender, in the event that the debtor or borrower fails to pay an amount owing under the loan agreement.

PERSONAL CONTINUING GUARANTYA guaranty relating to a future

liability of the principal, under successive transactions, which either continue his liability or from time to time renew it after it as been satisfied.

A Personal Continuing Guaranty is an agreement by a guarantor to be liable for the obligations of someone else to the lender, even if there are several different obligations that are made, renewed or repaid over time.

In contrast, a Specific Guaranty is limited only to one individual transaction.

Under a Continuing Guaranty Agreement, the guarantor agrees to back up everything the borrower owes to the lender, no matter how many notes or transactions are involved.

This agreement is unlimited in amount, which means that there is no cap on the amount that the guarantor is ensuring.

No matter how much money the borrower borrows, the guarantor is promising to repay those amounts if the borrower doesn't.