Legal Question in Bankruptcy in California

Re: Chapter 7 BK & Personal Guaranty

The personal guarantee is a debt in your client's chapter 7 bankruptcy just like his credit cards and other debt (unless it is a secured debt), and unless it fits into a category of non-dischargeable debts, or the Trustee liquidates assets and makes a distribution to creditors, you will not receive anything from the debtor. Solely because it is a personal guarantee does not somehow elevate its status in his bankruptcy. The personal bankruptcy, however, does not discharge the corporation's obligation to repay the debt.

I would strongly suggest, for a debt of $100,000, that you invest a little time and money and contact a bankruptcy attorney to review this in detail. There are things to look for in a Chapter 7 personal bankruptcy which might allow you to exempt the debt from discharge, to help point the Trustee to any bankruptcy fraud, abuse or hidden assets, or if nothing else, help protect the debt still owed by the company. If you wish, I'm more than happy to discuss this with you by phone, or email me off the board for more details.

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