You signed personal guarantees to save your business. Now creditors threaten your home, your savings and your future. Business owners across downtown Eugene, Salem and Newport face this nightmare daily when company debts become personal liabilities.
When business debt becomes personal debt
Personal guarantees make you personally liable for business obligations. If your company cannot pay suppliers, landlords or lenders, creditors can pursue your personal assets. Under Oregon Revised Statutes § 18.385, creditors can garnish up to 25% of your disposable earnings to satisfy judgments. However, Oregon’s Family Financial Protection Act now protects more of your income. As of July 2026, creditors cannot garnish your wages if it leaves you with less than $400 per week.
Common personal guarantees that trap business owners
Business owners throughout Oregon face pressure from multiple sources. These obligations stack up quickly and create financial stress that affects every part of your life. Personal guarantees frequently appear in:
- Commercial lease agreements for retail or office space
- Equipment financing and vehicle loans for business use
- Lines of credit from banks or alternative lenders
- Vendor accounts with extended payment terms
Without addressing these guarantees directly, the debt follows you even if you close your business.
How bankruptcy can address personal guarantees
Chapter 7 bankruptcy may discharge personal liability on business guarantees if you qualify based on income requirements. This legal process stops wage garnishments and collection lawsuits while eliminating eligible debts. Oregon’s 2026 bankruptcy exemptions offer significant protection for your assets.
Oregon’s updated protections for business owners
The homestead exemption now protects up to $150,000 in equity for single filers or $300,000 for joint filers, and the vehicle exemption has increased to $10,000. However, waiting too long can result in judgments that complicate your case. A skilled bankruptcy attorney can evaluate which debts qualify for discharge and guide you through these protections before it is too late. Your business may have struggled, but your future does not have to.
