Personal Guarantee Business Credit

[Walangatik]

I have 5 credit cards that business debt and all are personally guaranteed.

a) do I treat the debt as personal debt?

b) Is it considered consumer debt or partly consumer and the rest business

c) can I still file 7

d) Do I need the means test.

Thanks Everyone.

[Walangatik]

Oh yeah, I forgot to mention, my business closed in 2006 but I still kept my credit cards active and always paid on time.

[tucson]

I have a similar situation that I guess I failed to even mention to the lawyer. Guess I will be on the phone in the morning!

[DavidSolomon]

Answer

A.) Yes treat them as personal debt if you are the only guarantor. Technically when you closed the businesses you were in default and all money was owed. Most credit card companies never research the accounts. I filed chapter 7 with 3 business cards I had personally guaranteed all were discharged.
B.) Now that the business doesn't exist it is consumer.
C.) Yes you can still file chapter 7..... HOWEVER, at the 341 meeting I was grilled about past businesses I have owned (i.e. what they were, did they have assets, any partners, etc.). In fact that is all he talked about. His assistant asked about two bank deposits and that was all. They talked about it for around 20 minutes. I would try and make a strategy and a paragraph about your business how it began, how it ended, and what happened in between.
D.) Well depending on your income from the business it could affect your means test, but just having those cards will not. The trustee will most likely ask for bank statements from the business if it was within the lookback period.

[Walangatik]

Thank you for your response. Its really helpful. One last question, myt understanding is that I am exempt from the means test. Is this correct? Will I need a B22A?

[biotechsolution]

since your business closed in 2006 and you kept using the cards. it wouldn't be considered non-consumer debt. so you would be subject to the means test.

[Walangatik]

ok, great, thanks:-)

[whipster1]

As for the means test, you would have to separate out the business debt from the personal debt. If the business debt is over 50% you are exempt.

[myid4u2c]

Just my opinion, however it is based on my situation. My attny told me it did not matter what type of card or what type of loan it was on as long as you could prove it was a business expense. The fact the business is closed should not make a difference, the money was for the business.
If you will have more than 50% consumer debt including your mortgage in your calculation you will not need to take the means test. You want this to be business debt if at all possible.