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VanDLaw
VanDLaw, Attorney
Category: Bankruptcy Law
Satisfied Customers: 833
Experience:  Chapter 7 & 13
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Does Bankruptcy relieve personal guarantees

Customer Question

I currently have about a 700 credit score with flawless credit, but my business has failed and now Im possibly looking at not making the secured lender whole, maybe coming up short as much as 1.5 million if they sell assets at a auction. Should I start preparing to possibly file personally since I have personal guarantees or is that not dischargable??
Submitted: 8 years ago.
Category: Bankruptcy Law
Expert:  VanDLaw replied 8 years ago.

HelloCustomer

 

If you file personal bankruptcy, most everything you have 'personally guaranteed' is discharged. Some things are not dischargeable such as student loans, so if you guaranteed a student loan, your bankruptcy would not be discharged. Credit or loans to your business that you personally guaranteed would be discharged.

 

If your business creditor cannot collect from your business it is likely they would try and collect from you personally.

 

Chapter 7 is what is called straight liquidation and can be filed if your last six month income does not exceed the means test for your area. If it does then your only other option is to file a Chapter 13 which is a repayment plan over a period of five years. There is a ceiling on how much debt can be discharged as well.

 

Filing bankruptcy has certain criteria that has to be met and determines which Chapter you would be able to file and which one is best for your situation. You should seek a consultation with a bankruptcy attorney in your area to go over the specifics.