I have a business line of credit for 45K which I am the personal guarantor. I closed my business but then found out that my ex-business partner (and friend) is also listed as a guarantor. She left the business over 5 years ago. She has excellent credit and I don't want my mistakes to tarnish her credit. I am 30-days late now on the monthly payment. The bank won't release her has a guarantor and I'm getting ready to file bankruptcy. How do I protect her? Do I not list this debt and just continue paying it?
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You're pretty much screwed, as is she. You can not "not" list the debt, for a requirement of bk is that you list all debts.
If the bank won't release her (and if I were in their shoes, I would not either!), then the full brunt of the debt will fall upon her shoulders. You need to advise her of what is going on a.s.a.p.
And... just because the debt may be discharged in bk does not mean that you can not pay it. Let her help you get it caught up, and you continue to pay it, and pay it on time.All information contained in this post is for informational and amusement purposes only.
Bankruptcy is a process, not an event....... -
The business can still pay the debt, just keep in on time. You are being released as a guarantor when you include the debt, the debt can still be paid. Perhaps the
bankruptcy will allow you the funds to pay this. But if you don't and the business does not, then the bank will go after the other guarantor.
If this is a debt in the name of the business and you are just a guarantor, the bankruptcy merely releases your guarantee, the debt isn't even really discharged
as a liability of the business or any other guarantors. The account should not report on her credit as in bankruptcy because it isn't, only a guarantor is bankrupt.
That is my understanding of UCC and how it works. I am not a lawyer, just a business person and former banker.Comment
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