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mmdesq
mmdesq, Attorney
Category: Bankruptcy Law
Satisfied Customers: 516
Experience:  Attorney with 13 years experience.
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I recently had a few events in my finances that changed my

Customer Question

I recently had a few events in my finances that changed my financial picture. I closed a business I've had for a number of years and the result is business loans totaling approximately $120K and little to no assets for the business. Since the business was an LLC, I believe some of the loans had a personal guarantee - though they don't appear on my credit report.

I have a house worth about $280K with about $105K still owed on it and have credit card balances I've used to basically live off of for the past 6 months - totally about $25K.

I'd like to reduce my debt as much as possible without affecting my personal credit much, if at all. To do this, I think I'd like to file for bankruptcy for the business but am not sure if by doing so that would affect my personal credit and/ my ability to secure commercial lending in the future. I'm also not sure if chapter 13 would reduce my business debt (and, if it requires I qualify some how) and, if so, how much? Could I negotiate with the lenders pre-bankruptcy and let them know I will not be able to make the payments due to going out of business and see if they'd reduce the debt. But, that, I'm sure would still affect my ability to secure commercial lending in the future.

And, of course, if there is a personal guarantee, would filing business bankruptcy prevent those banks from going after my house or other assets or would it just be a waste of time. I'm not going to file business bankruptcy if the banks are just going to sidestep it and file against me personally.

I do not want to file personal bankruptcy if at all possible. Any help is appreciated. Thx.
Submitted: 3 years ago.
Category: Bankruptcy Law
Expert:  mmdesq replied 3 years ago.

mmdesq :

Good Evening:

mmdesq :

I have had many clients in the bind you are in.

mmdesq :

A business bankruptcy will not relieve personal guaranties.

mmdesq :

To be relieved of your personal obligations you would have to file a personal bankruptcy. Your business debts and personal guarantees for them will not appear on your credit report.

mmdesq :

You should id all assets and then determine their value and whether they have equity. Once equity is determined you then must determine if it is protected by your available bankruptcy exemptions. You should also identify and include all debts, business and personal. Last will be the issue of your expenses and income.

mmdesq :

Your ability to obtain future commercial loans is already damaged regardless of whether you proceed with a bankruptcy.

mmdesq :

Your focus and goal should be to start over with a clean slate. Your credit is already unfortunately damaged and it is a matter of rebuilding rather than preserving. I strongly recommend retaining an experienced bankruptcy attorney to ensure as much debt as possible is discharged and all of your assets are protected.

mmdesq :

I hope this is helpful. Good Luck.