Will a personally guaranteed business loan be included in bankruptcy? 35 Answers as of November 07, 2011

If a business bankruptcy is filed all debts and assets must be listed. If a debt has been guaranteed by an individual who has not filed bankruptcy it must be paid.

You will be personally liable for any amount still owing the creditor after the business bankruptcy. A business bankruptcy does not affect your personal liability.

Nobody has to file bankruptcy but the business loan that you personally guaranteed will not go away and you will remain liable for that debt even after the business bankruptcy.

The reason why a lender asks you to give a personal guarantee is for just this circumstance. If the business goes bankrupt without any assets, then the lender will look to you personally for payment. You would have to file a personal bankruptcy to avoid this, if you otherwise qualify.

The only way you will avoid liability for the guaranteed loan is to file a personal bankruptcy.

If you guaranteed a loan and you do not file for bankruptcy, the creditor will be free to come collect from you. The whole purpose of a guarantee is to give someone for the creditor to collect from when the primary borrower goes bankrupt.

You either need to file bankruptcy personally, or make some arrangement to pay or settle the loan that was personally guaranteed.

You never have to file bankruptcy. Filing bankruptcy is always an option; a tool if you will. Before filing bankruptcy for this kind of debt, you should have a lawyer look at it to see if the personal guarantee is legally enforceable. Sometimes they are not.

For a business filing, you really should sit with an attorney to discuss all the issues in the case(s) to see what your best options are. If you personally guaranteed a loan, it appears difficult to avoid a personal bankruptcy filing, especially since business entities who file for Chapter 7 relief, do NOT get a discharge. Therefore, the better approach may be to file only at a personal level and not file for the business.

In order to avoid liability for a personally guaranteed loan, you would HAVE to include that debt in a personal bankruptcy, too. You would be better allowing the debt to go to judgment so that it would become an unsecured debt (if bankruptcy is the ultimate plan anyway).

Unless the amount is relatively low and you could pay it, the decision was just made for you - you'll have to file a personal bankruptcy. I'm not sure the business BK is even necessary, but that would depend on other factors. Given there is a business, you would definitely want to consult with a bankruptcy attorney.

If you personally guaranteed the debt you will have to file a personal bankruptcy to get rid of it.

You will still be personally liable for the debt unless you file personally.

The bankruptcy code does not authorize discharge of business debt, it typically is restructured and paid through the restructured plan. Personally guaranteed business debt will not be discharged in a business bankruptcy and the creditor would have the right to pursue you personally to collect the debt if you do not pay it under the restructured payment plan. If you want to discharge the debt so you are no longer liable for it then you will need to file a personal bankruptcy. You should consult with a bankruptcy attorney about your options for filing on your business and personal debts to make sure you are properly protected from creditors collecting on either the personal or business debts.

The reason lenders want personal guarantees is for recourse when the business fails or goes bankrupt. You will remain personally liable for the loan and bankruptcy is one course you can take.

If you personally guaranteed the loan then you will be responsible if the business fails to pay. Also, as you didn't indicate it, unless your business is a Corporation you wil probably be responsible for all the debt.

Unfortunately not. A business bankruptcy will only protect the business, but not your personal guarantee. Thus, you will still need to "personally" pay the debt unless you file for bankruptcy as well.

If you have granted a personal guarantee, a bankruptcy for your business will not discharge the personal debt.

If you file a bankruptcy (or otherwise default) on your business loan, the lender can (and almost certainly will) seek to collect upon all personal guarantees. If you have granted the lender a personal guaranty on a business loan, a bankruptcy for the business will not help you with regard to the personal guaranty. If you want to discharge your personal liability to the lender under the personal guaranty, you will need a personal bankruptcy.

Bankruptcy by a business entity such as a corporation, LLC, etc., will not relieve you from liability on your personal guarantee, unless the obligation is paid in full by the business entity.

A business that files bankruptcy will not receive a discharge - it is just a way to dissolve it in an orderly fashion and distribute assets. You will remain liable for any business debts you guaranteed.

Unless your business is an LLC or corporation then the business is you. Even if an LLC or Corporation, rarely it makes sense for that legal entity to file bankruptcy and usually is better to dissolve it and have you personally file the bankruptcy case and wipe out all debts. If you have personal guaranteed loans then they are coming after you after the bankruptcy of the LLC or Corporation anyway so why bother and you can save money and time by your filing a personal bankruptcy. Obviously, this is something you need to discuss with a highly experienced bankruptcy attorney to see what is the best option.

It is very important that you get good advice before filing for your business. Many times it is not necessary to file for the business since debts are not discharged in a chapter 7 case and if the company has no assets it is judgment proof and there is nothing for creditors to get anyway.

You would have to file a personal bankruptcy in order to eliminate your personal liability pursuant to the guaranty for the loan. So, yes, you would need to file a personal bankruptcy if you cannot afford to pay that loan.