The guarantee comes due: lease and loan exposure after closure

What a personal guarantee actually obligates

A personal guarantee is a promise you sign, separate from the business, to pay a practice debt if the practice cannot. When the practice closes or defaults, it lets the landlord or lender reach your personal assets, even though the entity was the borrower or tenant. The corporate shell that protects you from ordinary business debts does not protect you here, because you contracted around it. Whether the exposure is capped depends entirely on the words in the guarantee.

For a solo practice, your credit is the practice's credit, which is why lenders and landlords ask for the guarantee in the first place. The single question that governs everything else is what your specific document says.

• Limited vs. unlimited. A limited guarantee caps the dollar amount or the time; an unlimited one does not.
• Joint and several. If a partner or spouse also signed, the creditor can collect the whole amount from either of you.
• Secured vs. unsecured. A guarantee tied to collateral lets the creditor take that asset first.

The moment it's called: your first moves

Do not ignore a demand letter; silence lets the creditor move to judgment. Read the guarantee and the underlying lease or loan the same day, note any cure period, and calendar every deadline in the letter. Acknowledge receipt in writing without admitting an amount, ask for a full accounting of what is claimed, and open a conversation about a realistic resolution. If the numbers are large or a lawsuit is threatened, this is the point to retain counsel.

Who to contact, in order:

• The creditor or its counsel, in writing, to acknowledge and request the accounting
• Your own attorney, if the amount is significant or suit is threatened
• Your accountant, to model what a settlement or payment plan does to your finances

A first written response names:

• That you received the demand and are reviewing it
• A request for the full ledger and a copy of the signed guarantee they rely on
• That nothing in the letter is an admission of the amount
• A proposal to discuss a resolution, with your contact for scheduling

Lease guarantees versus practice-loan guarantees

The two guarantees behave differently, so read yours before you assume the worst. A commercial-lease guarantee may be unlimited for the full remaining term, or it may carry a good-guy clause that caps your exposure if you vacate cleanly, return the keys, and give notice. A practice or equipment loan guarantee usually tracks the outstanding balance and may be secured by specific collateral. Federal small-business loans often require a personal guarantee as a condition of the loan. The document controls.

With a lease, the practical lever is often the space itself: a landlord who can re-let quickly has less incentive to chase the full term. Ask what it takes to satisfy a good-guy clause and whether an early surrender releases you. With practice loans, the lever is the collateral and your payment history. If the debts extend well beyond one guarantee, the broader question is your insolvency options, not this single obligation.

Negotiating a workout before default hardens

Creditors prefer a negotiated payment over a judgment they may never collect, so a workout is often reachable. Common paths include a lump-sum settlement for less than the face amount, a forbearance that pauses payments, or a payment plan spread over time. Bring a realistic picture of what you can pay and what the practice's assets are worth. Get any agreement in writing, including a release of the guarantee on completion, before you send money.

• Lump-sum settlement. Often the cheapest total outcome when you can raise a partial amount quickly.
• Forbearance. Buys time to sell assets or collect receivables without a default on your record yet.
• Structured payment plan. Lowest monthly bite, but longest exposure; confirm it releases the guarantee at the end.

Whatever the shape, insist the written agreement says the guarantee is discharged when you perform. A payment that leaves the guarantee alive has bought you nothing but time.

What survives when the practice closes

Closing the practice ends the business, but not every obligation attached to it. Your professional associations publish guidance on closing a practice in order, from notifying patients to arranging record custody 1Ref 1APA Services, Inc. (2026).Practice — APA Services.That a professional practice organization publishes practice-management and legal/regulatory guidance on closing a practice in order, including patient notice and record custody.. Your record-retention duty continues after the doors close: the APA guideline example is seven years after the last service for adults and longer for minors, always deferring to your state's rule 2Ref 2American Psychological Association (2007).Record Keeping Guidelines.The record-keeping guideline's retention example of seven years after last service for adults and longer for minors, always deferring to state law, as the duty that continues after a practice closes.. A basic continuity plan makes the wind-down orderly rather than frantic 3Ref 3U.S. Department of Homeland Security (2026).Ready.gov Business.The federal business-continuity planning framework sized to a practice of one, used to keep a wind-down orderly..

The guarantee is one line item in a larger closure. Sequence it with the rest: patient notice, records, and storage after the practice all continue whether or not the guarantee is resolved. A professional will names who takes custody of records if you cannot, and it belongs in the same file as the closure checklist. Handle the guarantee as its own negotiation, but do not let it eclipse the duties that outlast the lease.

When you genuinely need a lawyer

You can handle a small, clear demand with a written response and a payment plan. Bring in counsel when any of these appear: a lawsuit or judgment is threatened, the amount would materially harm your household, the guarantee's terms are ambiguous or you dispute what it covers, a spouse co-signed, or bankruptcy is on the table. A short paid consult early is cheaper than unwinding a default judgment later. Bring the guarantee, the lease or loan, and the demand letter.

Counsel is most useful before you have committed to anything. A lawyer can read whether a good-guy clause applies, whether the accounting is inflated, and whether the creditor has actually followed the contract's notice steps. Those are the points that move a settlement. Deciding whether to pay from personal funds, restructure, or file is a financial and legal judgment to make with advisors who can see your whole picture, not from a template.