How are personal guarntees handled in a Chapter 13 bankruptcy?

My brother and I own a retail center and we have recently become casualties of the economy. The bank has filed to foreclose on the property. We signed a personal guaranty for the loan. I have a few questions. Will the guaranty be split between us? How is the amount owed to the bank determined? If we have to declare bankruptcy, I’m guessing 13 if we do, will the guaranty be discharged?Where do I file for bankruptcy if I live and work in one state but my home and family is in another, and my brother is in a third state where the property is also located?

Asked on June 7, 2012 under Bankruptcy Law, Tennessee


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Under federal law, the filing of one's bankruptcy is in the county where the debtor resides. A Chapter 13 bankruptcy is a reorganization as opposed to a liquidation. If you file for bankruptcy under a joint obligation, any bankruptcy order would apply to you as to the entirety of debts owed by you. The personal guaranty does not get split since you are jointly and severally responsible for it under the laws of all states if the document states so.

If your brother needs to file for such protection, he needs to file in the county and state where he resides. His bankruptcy would be completely separate from your and the same thing pertains to yours as to his.

In some reorganization bankruptcies, debts are discharged completely, restructured or pennies on the dollar are paid to creditors.

I suggest that you consult further with a bankruptcy attorney concerning the questions that you have written about.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.