My Nebraska Business is Failing. Will I Lose My House? A Guide to Personal Guarantees

You poured your heart, soul, and savings into your Nebraska business. Now, as the pressure mounts, a different kind of fear creeps in: not just losing the business but losing everything. Will your home, your car, and your personal savings be next?

This is the agonizing question many small business owners ask when facing the looming threat of personal guarantees.

The fear is real—and it usually stems from contracts signed along the way to fund or grow the business. The good news is there are ways to protect yourself, and there are legal tools designed to help.

At John Turco Law, we’ve guided Nebraska and Iowa business owners through these exact struggles, helping them preserve what matters most: their families, their homes, and their futures.

What Exactly is a Personal Guarantee?

A personal guarantee is simply a promise you make, in writing, that if your business cannot pay a debt, you will. Even if your business is structured as an LLC, S-Corp, or partnership, a personal guarantee bypasses those protections and puts your own assets on the line.

Common places where personal guarantees appear include:

• Commercial leases (for your storefront or office space)
• Bank loans and SBA loans
• Vendor credit lines (suppliers for inventory or equipment)
• Equipment leases or financing agreements

How Personal Guarantees Impact Your Personal Life

When a business fails and a personal guarantee is triggered, creditors don’t just walk away. They can:

• Sue you personally and obtain a judgment
• Garnish your personal bank accounts
• Place liens on your property, including your home in certain cases
• Garnish your wages if you take a job after the business closes

In other words, those “business debts” quickly become indistinguishable from personal debts—just like unpaid credit cards or medical bills.

Protecting Personal Assets Through Bankruptcy

The most powerful tool to stop the crushing weight of personal guarantees is a personal bankruptcy filing. Depending on your circumstances, either Chapter 7 or Chapter 13 may provide the strongest protection.

Chapter 7 for Personally Guaranteed Debts

• Eliminates most unsecured debts, including personally guaranteed business loans
• Nebraska exemption laws allow you to protect a substantial amount of essential assets, such as equity in your primary residence, your vehicle, and retirement accounts
• Offers a clean financial slate so you can begin rebuilding

Chapter 13 for Personally Guaranteed Debts

• Creates a 3–5 year repayment plan tailored to your income
• Stops collection actions immediately, including lawsuits and garnishments
• Allows many debts to be reduced or discharged at the end of the plan

The Automatic Stay

The moment you file for bankruptcy, an automatic stay takes effect. This legal shield halts all creditor actions—lawsuits, phone calls, garnishments, even foreclosure efforts—giving you immediate relief and breathing room to make sound decisions.

Mistakes to Avoid

• Hiding Assets: Transferring property to family or selling assets below market value before bankruptcy is considered fraudulent and can result in serious penalties.
• Ignoring the Problem: Creditors will enforce personal guarantees. Waiting only narrows your options.
• DIY Approaches: Nebraska bankruptcy law is complex, especially when it involves exemptions and business-related debts. Working with an experienced bankruptcy attorney ensures you don’t make costly mistakes.

Your Next Steps

If your business is struggling and personal guarantees are weighing on you, know this—you don’t have to face it alone. At John Turco Law, confidential consultations are available to help you understand your options. We’ve been serving Nebraska and Iowa business owners for decades, and we know how local laws and exemptions apply in real-world situations like yours.

A New Beginning is Possible

A failing business does not have to mean personal financial ruin. While personal guarantees can be intimidating, bankruptcy law is specifically designed to give honest people a chance to reset and move forward.

You’ve worked too hard and sacrificed too much to give up now. With the right legal guidance, you can protect your family, your home, and your future. Reach out today—and take the first step toward a new beginning.