Terribly bad sign takes guts (7)
I believe the answer is:
abdomen
'guts' is the definition.
(I've seen this before)
'terribly bad sign' is the wordplay.
'terribly' indicates anagramming the letters.
'sign' becomes 'omen' (omen is a kind of sign).
'bad' anagrammed gives 'abd'.
'abd'+'omen'='ABDOMEN'
'takes' acts as a link.
(Other definitions for abdomen that I've seen before include "Where one digests" , "Midriff" , "Part of body containing the stomach" , "Bodily region" , "Part of the body below chest and diaphragm" .)