Personal guarantees can help you build a business from the ground up but can also place you in severe financial jeopardy if your enterprise fails. If creditors want to collect on your personal guarantees, you must take swift and decisive action to insulate your assets from your business debts.
If you are an entrepreneur with limited assets, committing to a personal guarantee may be the only way to secure the essential loans you need to establish your business. When you commit to a personal guarantee, you agree to take individual responsibility for your business’s debts. You “guarantee” you will cure the loan with your assets if your business cannot meet its obligations.
This means your creditors can go after your business and you if your business fails and defaults on a loan. Turbulent and unpredictable economic conditions can cause all types of businesses to struggle and become unable to pay their debts. When personal guarantees are involved, however, you — the individual — are on the hook for resolving what your business cannot. This can result in an otherwise financially prudent individual becoming abruptly saddled with overwhelming debt. If you are now responsible for business debts, creditors may eventually choose to sue you to guarantee payment.
If your business is struggling, you may be tempted to explore Chapter 11 bankruptcy. This type of bankruptcy relief allows companies to reorganize their debts, assets, and obligations to remain solvent. However, Chapter 11 bankruptcy for a business entity will not eliminate the individual’s guarantees. In other words, when a business entity files for Chapter 11 bankruptcy, the individual with personal guarantees still stands as an obligor. Subchapter V of Chapter 11 may be an option for either the individual business owner or the small business entity to reorganize and ensure personal asset protection effectively.
Most business debts associated with personal guarantees are considered “dischargeable.” Business debts facilitated by personal guarantees can often be eliminated through a successful consumer bankruptcy filing.
Several types of consumer bankruptcy options are available for the individual looking to discharge business debts. Our personal guarantee elimination attorneys in Detroit can advise which approach is suitable for your situation.
Our Metro Detroit personal guarantee elimination attorneys can advise which approach suits your situation.
Bankruptcy may not be the right solution for everyone facing overwhelming debt. At Wolfson Bolton Kochis, we believe in exploring all available options to find the best debt relief solution for your situation. Our experienced team can guide you through a comprehensive analysis of your financial circumstances and help you understand the alternatives to bankruptcy.
Some debt relief alternatives to consider include:
Our team will take the time to understand your financial goals and help you navigate the complexities of each alternative. We are committed to providing personalized and comprehensive guidance to help you achieve long-term debt relief and regain financial stability.
Our Metro Detroit personal guarantee elimination lawyers are prepared to help you navigate consumer bankruptcy as efficiently and effectively as possible. At Wolfson Bolton Kochis PLLC, we strive to provide each of our clients with the personalized attention, respect, and compassion they deserve. We know how to address personal guarantees through bankruptcy and can review all legal options.
Contact Wolfson Bolton Kochis today at (248) 247-7070 or contact us online to schedule a meeting with our personal guaranteed debt elimination attorneys in Detroit!