If your business is a sole proprietorship, then you are generally liable for all of its debts. In addition, since your house was used as collateral for the debt, it can be foreclosed upon if you default on the loan. Unfortunately, while a personal bankruptcy can eliminate the debt such that you no longer owe it, that doesn’t prevent the lender from foreclosing on your house since consensual liens are not generally eliminated in bankruptcy.
Therefore, I’m sorry to say that your options are quite limited. All you can do is talk to the lender and try to work something out so that you can save your house … perhaps a payment plan in exchange for not filing for bankruptcy.
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