I own an LLC that still has a chance to be profitable, but I personally guaranteed the business debt, including merchant cash advances. My attorney mentioned personal Chapter 7, but the business would keep operating and still owe its own debts. Can a personal bankruptcy remove my guarantee without destroying the company?
A personal bankruptcy can sometimes discharge your personal liability on guarantees, but it does not automatically eliminate the LLC's separate debt. The business may still owe the MCA funders, and they may still have UCC rights, processor rights, or claims against business receivables. Whether the business can keep operating depends on cash flow, ownership interests, assets, leases, lender actions, and bankruptcy rules in your district. This is a situation for a bankruptcy attorney who understands closely held businesses and MCA contracts, because the personal and business pieces have to be planned together.