Can we file for a business bankruptcy if our home loan and business loan are combined as one loan?

Get Legal Help Today

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

Can we file for a business bankruptcy if our home loan and business loan are combined as one loan?

We have a small retail business and due to competition, economy etc. we are barely hanging on. We are just beginning to check into business bankruptcy. However, when we refinanced a few years ago it was suggested we put our house and small business loan together for a better rate, so we did. How would/will this affect our home if we file business bankruptcy? Will we lose our home? Should we try to separate the two?

Asked on August 6, 2012 under Bankruptcy Law, Wisconsin


Terence Fenelon / Law Offices of Terence Fenelon

Answered 10 years ago | Contributor

What is a business bankruptcy?  I have practiced bankruptcy law for over 30 years and don't know the definition of the term.

Unfortunately, the facts given in you quetion lack enough info for a proper response, but I 'll try.

The first question: what is the nature of the business?  Is it incorporated?  If so, iis it a Sub-S or a C corp?  If not, then the debts are yours and you wouldn't be able to segregate them.  All debts of an entity, business or personal, must be included in a bankruptcy filing.

If you have personal guantees with your vendors for product, those would also survive a bankruptcy filing and come back to you.

Assuming that you are incorporated, and that you placed your residence as additional guarantee for the business loan, upon the filing of the bankruptcy, the lender could proceed against you personally for the amount still owed.  You could reaffirma the debt )agree to continue paying the obligation) to prevent a foreclosure upon the note,  Many lenders will modify the terms of a loan agreement in today's bleak economy rather than acquire another piece of non-performing property to their portfolio.

I would advise speaking with an attorney in person and have available all of your documentation as it will be vital for a sound legal opinion to be rendered.

Good Luck>

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.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption