FAQs | What Happens When You Become Bankrupt?
When someone provides a guarantee for your debt they are saying, if you cannot pay the loan, they will pay it for you. So, while bankruptcy will clear your obligation to repay the debt it does not extinguish the liability for the person who guaranteed your loan.
Where a guaranteed loan exists, the person who has filed for bankruptcy, if financially able and so inclined is legally able to keep paying the debt during bankruptcy so that the guarantor does not have to repay the loan.
If you are filing for bankruptcy and have guaranteed a loan for a friend, family member, or company, the guaranteed loan is included in your bankruptcy and your obligation for the repayment is extinguished. If other parties have also guaranteed the loan, the creditor can still pursue those other guarantors who have not entered bankruptcy.
If you have a guaranteed loan and would like to discuss your circumstances, we are only a phone call away for you to ask your questions and have a chat.
Nicholls & Co have a complementary ‘help desk’ to answer your questions on bankruptcy. Call Nicholls & Co on 1300 060 122 or email email@example.com.