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CalAttorney2, Attorney
Category: Legal
Satisfied Customers: 10244
Experience:  Civil litigation attorney for individuals and businesses.
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We had formed an llc partnership. The loan we took out was

Customer Question

We had formed an llc partnership. The loan we took out was originally signed by both partners. When we refinanced, we paid half of the loan off and the remainder was collateralized with business assests only and only with my signature. Not personal property. I had to file bankruptcy. Now the bank 3 years later is going after my partner that never signed the note but was listed on the refinance. Do they have anyway of collecting when they refused the assests when we closed and only collateral listed was the business assets?
Submitted: 2 years ago.
Category: Legal
Expert:  CalAttorney2 replied 2 years ago.
You have a rather unusual situation. Generally lenders are very careful in ensuring that all owners of small LLCs or s-corps sign as personal guarantors of loans and refinances.To get the answer to your question you are going to need to very carefully review all of the documentation associated with the refinance to determine whether the refinance created an entire new loan (in which case your partner would no longer be liable), or if it simply created new terms for the old loan (in which case your partner's liability would still carry through).Your partner may wish to retain an attorney to review the loan docs on his behalf - even if there is no liability, having a lawyer review the documents and provide an opinion, combined with a firm letter to the bank regarding his position may be helpful (a lawyer doesn't give your partner any additional legal rights, but it can help him more fully assert those rights, and particularly in a negotiations or bargaining position, having a lawyer can greatly increase his bargaining power).