Submitted by RDonald on Thu, 09/23/2010 - 08:42
Posted in
My husband and I signed personal guarantees for a loan to our LLC corporation when we were trying to grow the business. The business in now circling the bowl and we're wondering if we are bound by the guarantee since we did it on behalf of the LLC which is going out of business. If we are liable, will bankruptcy help us? Thanks.
Editor's Response
Yes. That is why lenders almost always seek to obtain personal guarantees for business loans. Your guarantee is a contract between you (individually) and the lender, and you are bound by the terms of that contract. However, you should certainly have an attorney review the documentation and the guarantees before taking any action. An experienced Massachusetts bankruptcy lawyer will be able to tell you whether bankruptcy is a viable option for you (e.g., whether it will accomplish what you hope to accomplish) and discuss whether you should file Chapter 13 or Chapter 7. Good luck.