A relationship breakdown affects every part of your life, including your finances. This is particularly the case if you are a director of a family company, you need to be aware of whether you are liable for any debts due to personal guarantees signed. If you were a guarantor or co-borrower for your ex-partner, you may be liable for their debts if they can’t or won’t repay their loan.
Often as part of a property settlement the partner will resign as director of the family or ex-spouses company however a director’s guarantee does not cease when you cease to become a director.
A “directors” guarantee is really a “personal” guarantee in that resignation as a director does not mean that you are automatically released from your obligations, particularly when the creditor does not know about the resignation.
We have acted in a number of cases where partners have resigned as directors as part of a property settlement some years ago, thinking they were “off the hook”, only to find that they are the subject of a guarantee claim years later.
Such claims can often be hard to defend. It is therefore critical, when you decide to resign as a director of a company, that you ensure you obtain a signed release of your obligations from the creditor and any co-guarantors.
As part of the preparation for any family law property settlement it is important to ensure that all personal and director guarantees are dealt with in the property settlement.
If you are separating we have a Financial Checklist to help you identify the documents and information required – just send us an email at [email protected] and we will forward it to you