Q: If you personally guarantee a business loan and file bankruptcy, can the bank go after your house/primary residence?
I opened the doors to my s-corp in 2020 and due to covid I may have to file for bankruptcy. I have a great opportunity to buy a house now and don't know if the bank will go after my house for collateral. Should I wait to see what the business does or is it safe to buy a house prior to a possible bankruptcy?
A: Talk to a bankruptcy lawyer before you do anything, especially before buying a house.
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A: If you are a personal guarantor, any judgment against you could attach to your home. So, if you file for bankruptcy first, buying a house would most likely be more difficult, but if you buy a home are sued, and the other side wins it could attach to your home as a lien.
A: I would never advise any client, ever to set up a Sub-Chapter S corporation. It offers no benefit to anyone other than the accountant who probably set it up for you. You need to have a strategy session with an experienced Bankruptcy attorney. You are not going to be able to purchase a new house at this time. This has to be dealt with first. During this pandemic, you have a choice of either seeing your attorney in person or by way of a secure state of the art Zoom Video Conference. So you don’t have to be restricted by geography anymore in terms of choosing an attorney. You can “Meet” your attorney online for an initial strategy session from the comfort of your own home. Through mail, e-mail and electronic filing almost everything can be done without leaving your home, for most types of cases. Pick the best attorney you can find and remember one rule: a good attorney is generally never cheap, and a cheap attorney is generally never good so don't choose based on price.
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