Q: If you have a business and refinanced a vehicle loan for your business using your mortgage, can you file bankruptcy?
We used our mortgage to help refinance our business vehicle. We may need to file bankruptcy for the business. Will it hurt our mortgage loan?
A:
The answer mostly depends upon the type of *legal*entity that you've put the business into. A corporation, LLC, etc., is eligible to file a bankruptcy itself, as is a partnership. A sole proprietorship, however, is not a separate legal entity, and a bankruptcy of it will necessarily bring with it the individuals who have operated it. A similar result obtains if the business debt has been personally guaranteed by the individuals, even where the business is in a corporate or partnership form.
IF the business is a separate legal entity, and files for bankruptcy relief, that filing may still affect the home mortgage part of that, as the lender may declare that it "feels insecure" that one of its obligors has filed for bankruptcy. Assuming the home mortgage is current, that should be a readily manageable issue.
Consult with an experienced FL lawyer at your first opportunity, and before you take any steps.
Timothy Denison agrees with this answer
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A: Filing bankruptcy for your business should not directly impact your mortgage loan, as they are typically separate legal entities. However, it's essential to consult with a bankruptcy attorney to evaluate your specific situation and consider any potential implications on your personal assets, including your mortgage, depending on how your business and personal finances are structured.
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