Business Line of Credit – personal guarantee consequences?
Jul 03, 2009
in
Business Line Of Credit
I stood guarantee for the business line of credit. The business is almost gone and the loan stands at 95,000 USD. Bank is coming after me. What do i do ? Personal bankruptcy has been suggested by friends. what are the consequences of personal bankruptcy? I am so very worried. Is there a nicer resolution for this? My credit score is very good right now.
Like this post? Subscribe to my RSS feed and get loads more!
3 comments
FRANK Mortgage Broker on July 3, 2009 at 10:30 am
The lender can and will hold you responsible.
I suggest that you attempt to work out repayment with the lender.
Be carefull. If you get the bank to accept less than what is owed, then the forgiveness of part of the debt is income. You will have to pay taxes.
The bankruptcy will hurt your credit. It stays on the credit report for about 10 years. You may stil be required to pay back the debt, depending on the terms of bankruptcy. Personal bankruptcy, Chapter 7, will erase the debt, but you lose you home, savings, etc. Chapter 11 (business)or chapter 13 (personal) is a debt restructuring. You still have to pay back the loan.
If the business files bankruptcy, it will show up on your credit.
R C on July 3, 2009 at 10:30 am
Your credit score is going to take a nose dive regardless of what you do if that loan is not paid.
Talk to an Attorney and even a BK Atty to discuss your options but I think you will find the first responder is pretty right on. If the put the loan in default and take it to court they could get a Judgment against you and then take steps to satisfy that Judgment. Best see the Atty in the morning.
stephenweinstein on July 3, 2009 at 10:30 am
Personal bankruptcy will make your credit score very bad for 7-10 years. Any other solution is better.
One option may be a home equity loan. Borrow enough to pay off the business loan.