Legal Question in Bankruptcy in Michigan

How will a personal bankruptcy affect existing business loans?

I am employed full time, but I have three side businesses with bank loans that are personally guaranteed. All three businesses are losing money, and I am subsidising the losses on a monthly basis. The banks won't negotiate as long as there is a personal guarantee and expect me to continue paying despite the businesses losing money. If I file personal bankruptcy, will the personal guarantees be eliminated? How will that affect the existing businesses?

Asked on 7/17/09, 7:04 am

1 Answer from Attorneys

Lesley Hoenig Lesley A. Hoenig, Attorney at Law

Re: How will a personal bankruptcy affect existing business loans?

If you file a personal bankruptcy, yes your personal guarantees will be eliminated. It will effect your existing businesses in that they are "assets" in your bankruptcy (even though if they are losing money they probably do not have a positive value), and the trustee could opt to try to sell them, but would only do so if there was value to selling them. The debts don't go away for the entities themselves, but you would no longer personally be liable.

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Answered on 7/17/09, 2:06 pm

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