Will a personally guaranteed business loan be included in bankruptcy? 38 Answers as of June 02, 2013

I am going to file bankruptcy for my business. I want to avoid personal bankruptcy if possible. One of the loans for the business is personally guaranteed by me. Do I also have to file personal bankruptcy?

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The Law Offices of Katie M. Stone
The Law Offices of Katie M. Stone | Katie M. Stone
If you default on a loan in your business name that you personally guaranteed, they have a legal right to attempt to collect the debt from you personally. If you file a chapter 7 bankruptcy on your business, you must stop operating. There is also a chapter 11 which is a reorganization bankruptcy for businesses in order to help you stay operating. In order to not be legally liable to pay on that loan personally you would need to file a personal bankruptcy as well. I hope you found this answer useful.
Answer Applies to: Florida
Replied: 11/7/2011
Philip R. Boardman, Attorney at Law
Philip R. Boardman, Attorney at Law | Phil Boardman
If you want to discharge your personal liability on that debt, you will have to file a personal bankruptcy.
Answer Applies to: Virginia
Replied: 11/2/2011
Indianapolis Bankruptcy Law Office of Eric C. Lewis
Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
Yes, a personal guaranty would survive a business-only bankruptcy.
Answer Applies to: Indiana
Replied: 11/2/2011
Law Office of Lynnmarie A. Johnson
Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
If you personally guaranteed the loan, either you have to file bankruptcy on it or make the payments.
Answer Applies to: Michigan
Replied: 11/2/2011
The Law Office of Darren Aronow, PC
The Law Office of Darren Aronow, PC | Darren Aronow
If it is personally guaranteed then you will remain personally liable if you file a business bankruptcy only.
Answer Applies to: New York
Replied: 11/2/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    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.
    Answer Applies to: California
    Replied: 11/2/2011
    Jakob-Barnes Law Firm, LLC
    Jakob-Barnes Law Firm, LLC | Jennifer Jakob-Barnes
    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.
    Answer Applies to: Georgia
    Replied: 11/2/2011
    Charles R. Nettles - Attorney at Law
    Charles R. Nettles - Attorney at Law | Charles R. Nettles
    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.
    Answer Applies to: Texas
    Replied: 11/2/2011
    Law Office of Jackie Robert Geller
    Law Office of Jackie Robert Geller | Jackie Robert Geller
    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.
    Answer Applies to: California
    Replied: 11/2/2011
    Law Office of Harry L Styron
    Law Office of Harry L Styron | Harry L Styron
    The only way you will avoid liability for the guaranteed loan is to file a personal bankruptcy.
    Answer Applies to: California
    Replied: 11/2/2011
    Colorado Legal Solutions
    Colorado Legal Solutions | Stephen Harkess
    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.
    Answer Applies to: Colorado
    Replied: 11/2/2011
    Jackson White, PC
    Jackson White, PC | Spencer Hale
    You either need to file bankruptcy personally, or make some arrangement to pay or settle the loan that was personally guaranteed.
    Answer Applies to: Arizona
    Replied: 11/2/2011
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    Yes.
    Answer Applies to: Georgia
    Replied: 6/2/2013
    Ray Fisher Law Offices
    Ray Fisher Law Offices | Ray Fisher
    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.
    Answer Applies to: Texas
    Replied: 11/2/2011
    The Orantes Law Firm
    The Orantes Law Firm | Giovanni Orantes
    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.
    Answer Applies to: California
    Replied: 11/2/2011
    LAW OFFICE OF MARGARET L. EVANS, PC
    LAW OFFICE OF MARGARET L. EVANS, PC | Margaret L. Evans
    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).
    Answer Applies to: South Carolina
    Replied: 11/2/2011
    Law Offices of Joseph A. Mannis
    Law Offices of Joseph A. Mannis | Todd Mannis
    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.
    Answer Applies to: California
    Replied: 11/2/2011
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    If you personally guaranteed the debt you will have to file a personal bankruptcy to get rid of it.
    Answer Applies to: California
    Replied: 11/2/2011
    Law Office of Larry Webb
    Law Office of Larry Webb | Larry Webb
    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.
    Answer Applies to: California
    Replied: 11/2/2011
    Bird & VanDyke, Inc.
    Bird & VanDyke, Inc. | David VanDyke
    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.
    Answer Applies to: California
    Replied: 11/2/2011
    Heupel Law
    Heupel Law | Kevin Heupel
    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.
    Answer Applies to: Colorado
    Replied: 11/2/2011
    Guardian Law Group PLLC
    Guardian Law Group PLLC | C. David Hester
    You will still be personally liable for the debt unless you file personally.
    Answer Applies to: Utah
    Replied: 11/2/2011
    Rhonda R. Werner Schultz, PL
    Rhonda R. Werner Schultz, PL | Rhonda R. Werner Schultz
    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.
    Answer Applies to: Wisconsin
    Replied: 11/2/2011
    Theodore N. Stapleton, PC
    Theodore N. Stapleton, PC | Theodore N. Stapleton
    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.
    Answer Applies to: Georgia
    Replied: 11/2/2011
    Gregory J. Wald, Attorney at Law
    Gregory J. Wald, Attorney at Law | Gregory J. Wald
    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.
    Answer Applies to: Minnesota
    Replied: 11/2/2011
    Law Offices of James Wingfield
    Law Offices of James Wingfield | James Wingfield
    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.
    Answer Applies to: Massachusetts
    Replied: 11/1/2011
    Bankruptcy Law Center
    Bankruptcy Law Center | Bill Zurinskas
    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.
    Answer Applies to: Colorado
    Replied: 11/2/2011
    Canty Law Firm
    Canty Law Firm | Timothy Canty
    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.
    Answer Applies to: Colorado
    Replied: 11/2/2011
    Ursula G. Barrios Law
    Ursula G. Barrios Law | Guillermo Machado
    Yes.
    Answer Applies to: California
    Replied: 6/2/2013
    Carballo Law Offices
    Carballo Law Offices | Tony E. Carballo
    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.
    Answer Applies to: California
    Replied: 11/2/2011
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