Signing a Personal Guarantee Can Make Bankruptcy Personal Too

As I finished by mentioning on Wednesday, a personal guarantee is often a common cause for clients filing Chapter 7 bankruptcy after owning their own businesses. Often, personal guarantees were signed early in the process of creating the business and the clients failed to consider the consequences of their signatures.

A personal guarantee is an agreement that makes the owner personally liable for the business debt. Many clients thought of these signatures as just part of doing business, but they end up being the reason people have to file personal bankruptcy. A Chapter 7 bankruptcy can often discharge most or all of the personally guaranteed business debt.

Again, as long as more than half of your debt can be proven to be non-consumer debt, you will generally be allowed to file Chapter 7. If you believe that a majority of the debt you have incurred is business-related and want to discharge your old debt, a Washington DC or Maryland bankruptcy lawyer may be able to help you file Chapter 7 bankruptcy without having to worry about taking a bankruptcy means test.

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