New Jersey
I own a bookstore in Jersey that is going under. The landlord where I rented was not a good landlord. I was in the middle of their 3rd year of a 5 year lease and was having a difficult time with cash flow since New Jersey is being hit really hard by the economic downturn and by the m*rtg*g* crisis.
Finally I managed to get the landlord to agree to allow me to pay only half of rent until the cash flow started back up again. This past month, just a few days ago, I called and told him that even if I emptied the business bank account along with my personal bank account, I wouldn't be able to pay him all of the half of the rent.
He told me that I have a week to get my stuff out or he would change the locks and seize all my stuff. This guy is an absolute idiot because I am one of only 3 businesses in his 6 bay building and I am actually trying to get him his money. So now he is probably going to place a judgment on my house, which I think means that he still doesn't get the money until I sell it, but I bought it to retire in, so I'm not planning on selling it anytime soon.
All this to explain that I am now closing my doors and have a lot of debt. But my question is, since my lease had a personal guarantee, if the business claims bankruptcy (its an LLC)
1) Would that get rid of the landlord being able to still come after me personally?
2) Would it look bad on my credit record personally?
From the LawyerCentral forum archive. Originally posted 5 August 2008 on a legal forum that has closed. Names and contact details were removed. See the original (Internet Archive).
Wow, I was going to post this same great question and I wish someone would answer it. With the economy the way its going, I'm sure there are many more businesses facing the same situation. It is almost pointless to get an LLC anymore because everybody wants a personal guarantor.
I'm not an expert on these matters, but ad far as I know, a personal guarantee on a lease means you are on the hook personally. The only way out is to either pay the total rent due through the end of the lease, try to negotiate a reduced amount with the landlord, or file for bankruptcy. The bankruptcy is the only thing that will hurt your credit. These are tough times for a lot of people, unfortunately.
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