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Business bankruptcy and personally guaranteed loans

Bankruptcy, Chicago

Many people who started their Cook County business from the ground up may have personally given their guarantee in order to obtain credit or financing. However, now that business is financially failing and bankruptcy is the only option left to try to save it. Many people believe that the bankruptcy will eliminate their personal liability concerning that debt but this may not be the case.

The U.S. Small Business Administration states that there are two types of personal guarantees for company debt. One type is referred to as a guarantee of collection and this gives business owners protection until a judgment has been issued in the creditor’s favor. However, to obtain the judgment, the creditor must initiate legal action. If the owner is not financially able to pay the debt, the creditor will probably not take such steps since it would not be worth the cost or time.

The other type is a guarantee of payment and this is the most commonly used by lenders and business owners. However, the downside of using this type is that lenders can pursue the owners for the balance owed without having to go through the courts. It can also really impact their personal credit line, especially if they used their own credit rating to get a credit card for the business. However, if businesses could get the lender to renegotiate the guarantee of payment to one of a collection, they might be able to eliminate their liability.

Entrepreneur recommends avoiding using a personal guarantee if possible because it is really hard for people to get out of the responsibility of paying the business’ debt. If there is a personal guarantee in place, then the lenders could go after the owner’s personal assets, even in a bankruptcy.

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https://billbusters.com/wp-content/uploads/2018/09/blog-image.jpg 300 300 Isaiah Oconnor https://www.billbusters.com/wp-content/uploads/2019/01/highres-logo-billbusters-transparent-1030x412.png Isaiah Oconnor2018-09-26 05:21:592018-10-07 18:28:28Business bankruptcy and personally guaranteed loans

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Located in Chicago, the law firm of Billbusters, Borges and Wu LLC. represents clients throughout Illinois, including, but not limited to the cities of :Alsip, Arlington, Heights, Bellwood, Berkeley, Berwyn, Blue Island, Bridgeview, Broadview, Brookfield, Burbank, Calumet City, Chicago, Chicago Heights,  Chicago Ridge, Cicero, Country Club Hills, Des Plaines, Dolton, Elk Grove Village, Elmwood Park, Evanston, Evergreen Park, Flossmoor, Forest Park, Franklin Park,  Glencoe,  Glenview, Glenwood, Golf, Hanover Park, Harvey, Harwood Heights, Hazel Crest, Hickory Hills, Hillside, Hines, Hoffman Estates, Hometown, Homewood, Justice, Kenilworth, La Grange, La Grange Park, Lansing, Lemont, Lincolnwood, Lyons, Markham, Matteson, Maywood, Melrose  Park, Midlothian, Morton Grove, Mount Prospect, Niles, Northbrook, Oak Forest, Oak  Lawn, Oak Park, Olympia Fields, Orland Park, Palatine, Palos Heights, Palos Hills, Palos  Park, Park Forest, Park Ridge,  Posen, Prospect Heights, Richton Park, River Forest, River Grove, Riverdale, Riverside, Robbins, Rolling Meadows, Schaumburg, Schiller Park, Skokie, South Holland, Steger, Stone Park, Streamwood, Summit Argo, Techny, Thornton, Tinley Park, Westchester, Western Springs, Wheeling, Willow  Springs, Wilmette, Winnetka, Worth and All of Cook County IL.

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