I’m a credit partner for a corporation. My business partner, who was supposed to handle payments, ran up $50,000 in credit card debt across 7 cards and now can’t pay. The cards are in the business name, but I’m the guarantor. I’m considering filing Chapter 7 for the corporation, but I’m worried about being personally liable. Can anyone explain what happens if I go this route? Any advice would be appreciated.
If you’re the guarantor, filing Chapter 7 for the corporation won’t absolve you personally. You’d still be responsible for the debt. It sucks, but that’s how it works.
Oran said:
If you’re the guarantor, filing Chapter 7 for the corporation won’t absolve you personally. You’d still be responsible for the debt. It sucks, but that’s how it works.
Yeah, that’s what I was afraid of. So I’d need to file personal bankruptcy too?
Oran said:
If you’re the guarantor, filing Chapter 7 for the corporation won’t absolve you personally. You’d still be responsible for the debt. It sucks, but that’s how it works.
Exactly. Chapter 7 for you could help wipe out personal liability, but it depends on your situation. Do you have assets you’re worried about?
Did you and your partner have a contract? If he was supposed to pay, maybe you can sue him to recover some of this.
Pippin said:
Did you and your partner have a contract? If he was supposed to pay, maybe you can sue him to recover some of this.
We do have a contract. He agreed to be the payor. But even if I sue, doesn’t the creditor still come after me?
Pippin said:
Did you and your partner have a contract? If he was supposed to pay, maybe you can sue him to recover some of this.
Yeah, suing him could help later, but creditors don’t care about your internal agreement. They’ll come after whoever guaranteed the debt.
Pippin said:
Did you and your partner have a contract? If he was supposed to pay, maybe you can sue him to recover some of this.
Suing might be worth it down the line, though, especially if he has any assets you could claim.
Have you looked into the Small Business Reorganization Act (SBRA)? It might give you a chance to restructure without dissolving the business.
Oli said:
Have you looked into the Small Business Reorganization Act (SBRA)? It might give you a chance to restructure without dissolving the business.
I’ve never heard of that. How is it different from Chapter 7?
Oli said:
Have you looked into the Small Business Reorganization Act (SBRA)? It might give you a chance to restructure without dissolving the business.
SBRA is like a simplified Chapter 11 for small businesses. It could let you restructure debt instead of liquidating.
Oli said:
Have you looked into the Small Business Reorganization Act (SBRA)? It might give you a chance to restructure without dissolving the business.
It’s worth looking into if you want to keep the business going. But it doesn’t help with personal liability.
Do you think your partner will actually start paying? Sounds like you’ve been burned already.
Quincy said:
Do you think your partner will actually start paying? Sounds like you’ve been burned already.
He says he will, but I don’t trust him. He hasn’t paid in three months, and now I’m stuck cleaning up the mess.
Quincy said:
Do you think your partner will actually start paying? Sounds like you’ve been burned already.
If he hasn’t paid by now, I wouldn’t hold my breath. Maybe start planning for the worst-case scenario.
Quincy said:
Do you think your partner will actually start paying? Sounds like you’ve been burned already.
Agreed. File if you have to and let him deal with the fallout later.
Does your state offer any exemptions that could help protect your assets if you file personal bankruptcy?
Reese said:
Does your state offer any exemptions that could help protect your assets if you file personal bankruptcy?
I’m in Utah. Not sure what exemptions they have for personal bankruptcy. Any idea?
Reese said:
Does your state offer any exemptions that could help protect your assets if you file personal bankruptcy?
In Utah, there’s a homestead exemption for up to $30k of equity in your home. Not sure about other assets.