Legal Question in Bankruptcy in California

Personal Guarantee

I am a partner in a home furnishings retail business (furniture, lighting, home accessories, etc.). The company has been in business for 15 years. I bought 1/3 of the business with another partner four years ago, and a year-and-a-half later bought the remaining shares of the company with that same partner (there are now 2 owners instead of 3). The exiting partner carried a personal on the shares which we both signed w/personal guarantees. Now that the economy has taken a dive and cash flow has dried up, we are about to default on this loan, and bankrupt the company (an S Corp.)

I don�t own any property�no real estate, no investments other than the company, and no retirement plans.

Is my best option filing bankruptcy? I�m current with my other obligations, but in no way could I come up with the money to pay off this note. If I don�t file, can he come after future income? How long can he pursue this debt?


Asked on 3/28/09, 9:20 am

2 Answers from Attorneys
Robert F. Cohen Law Office of Robert F. Cohen

Re: Personal Guarantee

I can't say whether it's the "best" option without reviewing your entire financial picture. A Chapter 7 bankruptcy would discharge most debts. With a Chapter 13, you would pay a portion of your debts over a period of years, usually 3 or 5 years.

Whether you would qualify for a Chapter 7 depends on many factors. Feel free to drop me an e-mail with your contact information and we could discuss this further.

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Answered on 3/28/09, 11:48 am
Daniel Bakondi The Law Office of Daniel Bakondi

Re: Personal Guarantee

I cannot say if when whether they would go after you personally, and what they may come after you for, without looking more closely at your situation.

Best,

Daniel Bakondi, Esq.

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Answered on 3/30/09, 2:22 am


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