Can Chapter 7 Help with Small Business Debt?

Texas Bankruptcy Lawyer Offers Solutions for SBA Loans

Video Transcript:

Leslie Rhode:

Can small business owners file Chapter 7 to get rid of personally guaranteed business debt? We ask Dallas, Texas attorney David Shuster, in this AskTheLawyers™ Quick Question.

David Shuster:

As a business owner, you're going to be personally guaranteeing the bulk of the debt of the business. That's just the way it goes. It's pretty rare for that not to happen; I'm finding it more and more common for them to insert a personal guarantee on the debt with a vendor supplier, but definitely on an SBA loan and definitely on a commercial lease with your landlord where you offer at your business, they're going to want a personal guarantee. So unless it's a business that's been in there for 10, 20 years... Yeah, you're going to be personally on the hook for everything, and the relief in bankruptcy for that person is a Chapter 7; this is the best form of relief to just get rid of all of the debt, and the distinguishing factor is that it's a bankruptcy for business debt not just standard run-of-the-mill credit card debt because someone lost their job.

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