Collecting From Personal Guarantors in California

When a small business defaults on an equipment finance agreement, the business often has little left. The owner who signed the personal guaranty usually has a house, bank accounts, and income. California enforces guaranties, but several rules can reduce or defeat the claim if the lender misses them.

Sue the guarantor with the borrower

Name every guarantor in the same action as the borrower. One case, one judgment, and one set of enforcement tools save time and cost. If the borrower has dissolved or filed bankruptcy, the guarantor’s liability generally continues under the guaranty’s terms.

Check the waivers

California’s suretyship statutes give guarantors defenses: exoneration when the creditor alters the obligation without the guarantor’s consent (Civ. Code § 2819), and the right to require the creditor to proceed against the borrower first (Civ. Code § 2845), among others. A guarantor may waive these defenses in writing (Civ. Code § 2856). Most equipment finance guaranty forms include those waivers; we confirm the language before filing, because a missing waiver invites a defense when the lender has extended, restructured, or released collateral.

Give Article 9 notice to the guarantor

If you repossess and sell equipment that secured a loan or EFA, the guarantor is a “secondary obligor” entitled to notice of the disposition (Com. Code § 9611(c)). A guarantor can waive that notice only by an agreement signed after default (Com. Code § 9624(a)); a waiver in the original guaranty does not work. If you skip the notice and the guarantor raises it, your deficiency can be reduced or eliminated (Com. Code § 9626(a)(3)).

Apply SB 1286

Since July 1, 2025, California’s Rosenthal Act governs collection from natural persons on covered commercial credit of $500,000 or less (Civ. Code §§ 1788.1(d), 1788.2(n)). A personal guarantor on a small-ticket account is squarely covered. Every letter, call, and email to the guarantor must comply. Suit on a guaranty of covered commercial debt may be brought in the county where the borrowing business is located (Civ. Code § 1788.15(c)). See our article on SB 1286 and AB 2116.

Prejudgment attachment

A writ of attachment freezes assets before judgment. Against an individual, attachment is available only if the claim arises from the defendant’s own trade, business, or profession (Code Civ. Proc. § 483.010(c)). Whether a guaranty qualifies depends on the guarantor’s role in the business, so we evaluate it account by account.

What you can reach after judgment

  • Community property. The community estate is liable for a debt either spouse incurs during marriage (Fam. Code § 910). A guaranty signed by one spouse can reach community bank accounts and real property. The non-signing spouse’s separate property is not liable (Fam. Code § 913).

  • Real property. An abstract of judgment creates a lien on the guarantor’s real property in each county where it is recorded. The homestead exemption protects equity up to the greater of $300,000 or the county median home price, capped at $600,000 and adjusted for inflation (Code Civ. Proc. § 704.730). Above that, the lien attaches to equity and is paid on sale or refinance.

  • Bank accounts and wages. Bank levies and earnings withholding orders are available, subject to statutory exemptions.

  • Business interests. Charging orders and assignment orders reach distributions and payment streams from other companies the guarantor owns.

Assets that move

Guarantors facing a judgment often transfer property to a spouse, a trust, or a new entity. California’s Uniform Voidable Transactions Act (Civ. Code § 3439 et seq.) lets a creditor unwind transfers made with intent to hinder creditors or without reasonably equivalent value while insolvent. Act early: the debtor examination and bank records usually show the transfers.

When the guarantor files bankruptcy

A guarantor who gave you a false written financial statement to obtain or extend credit may not be able to discharge the debt (11 U.S.C. § 523(a)(2)(B)). The complaint must be filed within 60 days after the first date set for the meeting of creditors (Fed. R. Bankr. P. 4007(c)). Keep the guarantor’s credit application and personal financial statement in the file from day one.

Grant, Kessler & Zunshine represents equipment finance lenders and lessors in California, on contingency. See how we handle equipment finance collections, or call (619) 233-7078.

This article provides general information, not legal advice, and reflects California law as of October 2026. Prior results do not guarantee a similar outcome. Grant, Kessler & Zunshine, APC, 1331 India Street, San Diego, CA 92101.

Alexander J. Kessler