Expert: Mark J. Markus- California Bankruptcy Attorney - 5/20/2009

Question
My partner and I are considering filing for LLC bankruptcy on our small business. Our only business debts are three and a half years on a commercial lease and a $20,000 credit card. We do not have the capital to remain in business. I cannot see on the credit card agreement that we agreed to be personally liable anywhere. Would this be our best option?

Also, we DID sign a personal guarantee to ONE of the partners that owns our building for our lease. He is in dispute with the other owners over where he has deposited our rent checks. We suspect there has been improper use of funds as well as a faulty lease agreement - the other owners do not appear on the lease or personal guarantee. If he is determined to be using our rent funds incorrectly, does this effect our liability on the personal guarantee?

Answer
As to your first question, I cannot answer based on the facts you have provided.  Whether it's your best option or not depends on what you're trying to accomplish by filing a bankruptcy for the corporation.  Corporations do not receive discharges of debts in a Chapter 7 case.  You may want to visit http://www.bklaw.com/business_bankruptcy.html for more details on business bankruptcies.

As for your second question, that is not a bankruptcy question and depends exclusively on the laws of whatever state the personal guarantees are governed by.