What does”In Rem” judgement mean?

Due to the 2008 meltdown, I had to close my retail floor covering store and file personal bankruptcy. I had listed my commercial building creditor since I signed a personal guaranty for the mortgage as officer of the LLC. The trustee dismissed it from the list not realising that I had signed the guaranty. The creditor is foreclosing and asking for “In Rem” judgement against me for any deficiency in sale of property. What are my options?

Asked on December 6, 2010 under Bankruptcy Law, New Mexico


MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Normally when an LLC (limited liability company) has debt, it doesn't flow to the individual owners unless statutory law allows or calls for personal liability or you as an owner of the LLC personally guarantee a business debt.  Herein lies the problem.  You got stuck in a no man's land because while you claimed personal bankruptcy, and personally guaranteed a business debt, the trustee probably thought it was a business debt with no implication of it being personal (a sort of piercing of the corporate veil) and kicked it out.  Now, you have personal liability but cannot discharge it.  If you personally guaranteed it with the thought you would not have to pay it, there are provisions that allow judges to deny those portions of bankruptcy claims that appear to circumvent the true intent of bankruptcy.  Judgment in rem is basically this person asking the status of the debt, attempting to maintain jurisdiction over the debt so that once you sell the property, any additional monies owed would need to be paid by you.  You may wish to talk to a bankruptcy lawyer about trying to get the debt discharged so that judgment in rem becomes a non-issue.  You may also wish to talk to the lawyer about filing bankruptcy for the LLC.

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