Am I Personally Liable for My Trucking Business Debt in Texas?
Quick Answer:
If you signed personal guarantees for your trucking business debt—even if the loan or credit card was under your LLC—you are likely personally liable for those debts in Texas. This means creditors can pursue your personal assets unless you file for personal bankruptcy and qualify for a discharge under Chapter 7. Texas law does not shield you if you personally guaranteed the debt.
Can a Texas LLC Protect Me from Business Debt if I Signed a Personal Guarantee?
Short answer:
Your LLC does not protect you from business debts you personally guaranteed. Most trucking business owners are required to sign personal guarantees for truck loans and business credit cards, making them personally responsible for repayment. Creditors can and do pursue your personal finances if the business cannot pay.
Real-World Scenario:
Let’s say you started a small trucking company in Harris County, operated for several years, and financed your rig through your business. When profits dropped, you had to surrender the truck. Now, you’re facing over six figures in remaining business debt—truck loan deficiency, maxed-out business cards, and other credit accounts. You thought the LLC would shield you, but those debts are showing up on your personal credit, and creditors are calling you directly.
Why This Happens:
In our 15+ years helping Texas truckers, we’ve seen that lenders almost always require personal guarantees for significant business loans and credit cards. This overrides the limited liability protections of your LLC. Once you sign, you’re on the hook as an individual, regardless of your business structure. Texas courts and the United States Bankruptcy Code both recognize this (see In re Hall, 304 F.3d 743).
What Most Owners Miss:
If you surrender your truck and there’s a balance left after the lender sells it, that balance becomes a personal liability if you guaranteed the loan. The LLC doesn’t protect you from deficiency claims, and those can easily total tens of thousands. Even if your business is closed, your personal liability remains.
Legal Reference:
Texas law honors personal guarantees, and 11 U.S.C. § 523(a) outlines which debts can and cannot be discharged in bankruptcy. Unless fraud or other misconduct is involved, most business-related unsecured debts—including deficiency balances—are dischargeable in a personal Chapter 7.
What Happens to My Business Debt If I File Personal Chapter 7 Bankruptcy in Texas?
Short answer:
Filing personal Chapter 7 bankruptcy can wipe out your trucking business debts—including most personally guaranteed loans and credit cards—if you qualify under the means test. Your personal and business unsecured debts go away, giving you a fresh start.
Specific Steps We Take:
1. Means Test Eligibility:
The first step is to see if you qualify for Chapter 7 using the means test (11 U.S.C. § 707(b)). This test reviews your household income—including your spouse’s—even if they aren’t filing. You’ll need to provide six months of income documents and bank statements. As we’ve seen with many trucking clients, a recent drop in your own income (like switching from owner-operator to company driver) can help you qualify, even if your spouse’s income is steady.
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What Bankruptcy Discharges:
In our experience, nearly all business-related unsecured debt, including truck loan deficiencies and business credit cards, is wiped out in a Chapter 7. You keep your home and any vehicles you’re still paying for, as long as you stay current. Texas Property Code Chapter 42 protects many personal assets, including your homestead. -
What Bankruptcy Doesn’t Wipe Out:
Certain debts are not dischargeable (like recent taxes or fraud-based loans), but most standard business debts are. If you’re not behind on personal obligations, those aren’t affected.
Key Nuance Most Truckers Miss:
Creditors will typically pursue you personally after the business fails—even if you closed the LLC. If you wait, creditors may get judgments that can impact your bank accounts or future wages. The cleanest route is to confirm your eligibility and file before legal actions escalate.
Legal Reference:
Under 11 U.S.C. § 523(a), most business debts are dischargeable unless tied to fraud or other exceptions. The means test process is governed by 11 U.S.C. § 707(b), and Texas exemptions protect your home and personal property.
What Should I Do Next If I Have Personally Guaranteed Trucking Debt in Texas?
Short answer:
Gather six months of bank statements and proof of income for yourself and your spouse. Pay the initial deposit toward bankruptcy fees. This allows a small business attorney in Dallas (or anywhere in Texas) to confirm you qualify for Chapter 7 and start the process of discharging your business debts.
Why Speed Matters:
The longer you wait, the more likely creditors will escalate collection efforts. In our 13,000+ cases, we’ve seen business owners lose sleep over threats to their home or wages—most of which are avoidable with quick action.
Clear Plan:
- Step 1: Upload your six months of bank and income records to your attorney’s secure portal.
- Step 2: Make the initial payment (usually a few hundred dollars, applied to the total fee).
- Step 3: Once eligibility is confirmed, your attorney will file your case. You’ll attend a short meeting (usually by phone or video), and within a few months, your debts are discharged.
[INTERNAL LINK: How Does the Chapter 7 Means Test Work in Texas?]
[INTERNAL LINK: What Assets Can I Keep in a Texas Bankruptcy?]
[INTERNAL LINK: Chapter 7 for Small Business Owners in Texas]
FAQ
Will bankruptcy stop creditor calls and lawsuits?
Yes. Filing bankruptcy triggers an automatic stay, which immediately stops most collection actions, lawsuits, and wage garnishments.
Do I lose my house or car in Chapter 7?
Usually no, as long as you’re current on payments and your equity is protected by Texas exemptions.
Can my spouse’s income disqualify me from Chapter 7?
Possibly. Household income is included in the means test, but recent drops in your income may help you qualify.
What to Do Next
Gather your last six months of bank statements and income records, then pay the initial fee—typically $335 for a Chapter 7 filing in Texas. We’ll review your information within 24 hours to confirm eligibility. Acting quickly can help you protect your home and discharge most unsecured debts that you personally guaranteed.
If you’re a former Texas trucking business owner worried about personally guaranteed debt, act fast. Upload six months of bank statements and income records for your household, pay the initial fee, and let an experienced small business attorney in Dallas confirm your Chapter 7 eligibility. This is the fastest route to a fresh start—protecting your home, your family, and your future.
Ready for relief?
Get your documents together and contact us now to start your Chapter 7 evaluation.
Daniel Herrin, Texas Bankruptcy Attorney | 15+ years | 13,000+ bankruptcy cases filed | Serving Dallas, Collin & Tarrant Counties
