So Confused

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So Confused
« on: February 03, 2017, 01:32:45 AM »
Hi, I am in a situation where my current business failed and a lot of the debts on that business are personally guaranteed by me. The assets have been returned to the leasing companies etc. but they will be likely coming back once they sell the asset and there is a shortfall. There is other personal guarantees I gave for business creditors, now they have too started filing for judgements to collect.

Along with the personal guarantees I have personal debts (credit cards / unsecured LOCs) which I maxed out, to keep the business running. Currently I am not working but own a house with some equity in it. I am not sure my options yet especially since not all the companies have given me a statement of claim for the business debts.

Personally I have about 75K and can't estimate the business debts yet but likely 125K or more.  The payments are killing me on the personal credit cards, and I am not sure if I should wait for the business creditors to send me their claims and let the judgements be filled or just file for bankruptcy now. I am open to the consumer proposal, and would actually prefer it since I would like to keep my house, but I am just not sure how it all works with the personal guarantees on the business debts.

All your help is appreciated.



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Re: So Confused
« Reply #1 on: February 10, 2017, 12:03:52 AM »
We've all been in that situation. It's tough but it's not the end of the world.
Please see a trustee asap. The trustee will assess your financial situation.
The first meeting is usually free of charge.



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Re: So Confused
« Reply #2 on: February 10, 2017, 03:53:57 PM »
As usual, I would suggest that you meet with a trustee to discuss your options.

Here are some points to consider:

In my understanding, thereís little difference between the debt you guaranteed and the personal debt Ė itís all money that you owe.

Once creditors are granted judgements against you, the amount that you owe to them will likely rise due to the creditorís expenses Ė court costs, legal fees, etcetera. The more debt you have, the more difficult it will be to offer a proposal that your creditors will accept. To my knowledge, you can file a proposal, even if you donít owe the amount owed to those creditors, and any debt that you end up owing will be included in the proposal. Any collection action against will be stayed by the filing of the proposal. If your debts rise above $250,000, you will be unable to file a consumer proposal and will have to file a much riskier Division I proposal.

If you decide to file for bankruptcy, I donít know how much difference it would make whether you file now or later, as long as you include all potential debts in your bankruptcy. Other than the value of your house rising over time, what else would change, beyond your debt rising due to interest and creditors determining the amount of the shortfall?

When you guaranteed the business debt, did you use your house as security? If so, this may change things.


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