Does a spouse that has given a personal guarntee on the spouses mortgage have to declare bankruptcy with the business

June 22nd, 2010 by Questions

There are many issues to deal with that will lead to my ultimate question.

My husband owns a business which includes a private mortgage where the payments are only paying the interest, the mortgage itself will never be paid off and I doubt he will ever be able to get a bank mortgage. His business has dropped is not and has not being doing well for years, we have been struggling for years, he keeps believing it will get better. He is two months behind in the mortgage, the hydro is outrageous, I have been trying to pay what I can, but have been using my credit to do so. The mortgage company have threatened to cease the property. He was paid by a customer today but the cheque will not clear for a week and the mortgage company is not willing to wait. Another problem is I don`t know if he will have the next payment and I don`t know if I will. The thing is I have just started rebuilding my credit after years of bad financial situations. The mortgage company holds a personal guarantee from me, as it is the only way they would lend him the money. I realize the business may need to declare bankruptcy, our problem is that means I have to as well, and I really do not want to lose the credit I have. The mortgage is on a building that houses the shop, an extra apartment and the apartment we live in, bankruptcy will also mean losing our home. My question is; Is there any way we can bankrupt the business without including me?

Posted from: Ontario


One Response to “Does a spouse that has given a personal guarntee on the spouses mortgage have to declare bankruptcy with the business”

, Barton Goth - Goth & Company Inc. -Trustee in Bankruptcy said:

If the property is ultimately foreclosed and your husbands business has to declare bankruptcy the net effect will be you will be the only part left on that mortgage and will solely responsible for the payment of the outstanding obligation. As a result if you are not able to maintain the payments on the mortgage you may be in a position where you have no other choice than to file for bankruptcy as well.

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