If I personally signed as a guarantor for a LLC business’s lease contract on a materials vendor line of credit but the business is now filing for bankruptcy, what will happen to me now?
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If I personally signed as a guarantor for a LLC business’s lease contract on a materials vendor line of credit but the business is now filing for bankruptcy, what will happen to me now?
Will I have to file for personal bankruptcy as well?
Asked on April 27, 2015 under Bankruptcy Law, California
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 8 years ago | Contributor
As a guarantor, you are liable for the LLC's debt if they do not or cannot pay the debt--even if the reason they do not pay is bankruptcy. Because they are a separate legal entity or person, their bankruptcy filing does not affect your obligations, including your obligations taken on as their guarantor. The creditor can come after you for the money; if you cannot pay it, you may need to file bankruptcy, too.
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