If I File Personal Bankruptcy What Happens To Corporate Debts I Personally Guaranteed?

11 Jan If I File Personal Bankruptcy What Happens To Corporate Debts I Personally Guaranteed?

Your individual bankruptcy can discharge your personal debts. Debts that you guaranteed for a corporation can be discharged as to you, but the corporation will still owe those debts.

Most small corporations cannot obtain credit without a major shareholder/owner signing the loan application as a personal guarantee. Often new or small corporations have few assets and can be dissolved as easily and as quickly as they were formed and are not good loan candidates. Lenders typically qualify loans to corporations based on the likelihood of repayment – a risk based on an individual’s promise to pay.

When the individual files bankruptcy, debts guaranteed for a corportation can be discharged as to that individual. A corporation is not permitted to discharge debts in bankruptcy. Even though the individual receives a discharge, creditors can seek payment from the corporation and from corporate assets.

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Andy Miofsky, Esq.

Andy Miofsky holds the highest AV PREEMINENT rating from Martindale Hubbell Law Directory and a perfect 10.0 from AVVO. Andy is an Illinois consumer rights lawyer with offices in Granite City Illinois. Andy represents people with bankruptcy and student loan debt problems throughout the Southern District of Illinois since 1979.
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