When business ventures and investments fail, lenders will exercise their rights under any personal guaranties. It is common for banks and other lenders to intimidate guarantors with threats to their personal assets and livelihood. What the lenders will not reveal is that frequently defenses exist to either the liability of the guarantor or the amount of the indebtedness the lender can recover from the guarantor.
Guarantors often file for Chapter 7 bankruptcy when their guaranties become due, but even this may not be the end. The bank may try to have the guaranty debt declared non-dischargeable under the Bankruptcy Code, 11 U.S.C. § 523(a), on the basis of alleged fraud or misrepresentations, among other reasons.
Do not face a lender without experienced counsel. Even if the lender’s right to payment seems unassailable, and even if you are able to cover the indebtedness from personal assets, be sure you have a mastery of your legal position. We are experienced in defending commercial guarantors in collection suits brought by lenders, as well as defending nondischargeability claims, and have obtained remarkable results for our clients, protecting millions of dollars of personal assets from lender claims.
Contact us for a consultation.