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Closed builder files bankruptcy over personal loan guarantees

The economic downturn has struck against a cross-section of Americans. The housing crunch has hit homebuilders hard in Ohio, and across the country. One Midwestern homebuilder closed his doors roughly 7-months ago due to the struggling market. During his years in business, the homebuilder signed a number of personal guarantees, backing loans taken out by his business. Now the former businessman has filed for personal bankruptcy protection to find debt relief from the personal guarantees.

The former businessman and his wife reportedly own two vacation homes, one on the West Coast and one in Florida. Those homes will be surrendered into the chapter 7 bankruptcy. That means the former businessman and his wife will allow the bankruptcy trustee to sell the homes for the benefit of the man's creditors on the personally guaranteed business loans. The couple's obligation on the home loans will be discharged in the bankruptcy proceeding. However, the former businessman hopes that he will be able to buy back one of the homes from the bankruptcy trustee.

The man's former business had been in operation since 1967. The 54-year-old homebuilder was forced to close the doors to the Indiana company in March, due to the sharp downturn in new-home home sales across the Midwest. The man picked up a job with another builder in April.

In the bankruptcy petition, the man reportedly shows more than 50 creditors. The man has obligations of $50 million to $100 million or more, according to his bankruptcy court paperwork.

The man's story is not entirely unique. The weak economic conditions have hit across many fields. Many small business owners, who had signed personal guarantees on loans for their businesses during better times, are finding that the dragging economy has changed the overall financial picture.

Source: The Indianapolis Star, "Paul Estridge Jr. files for personal bankruptcy," Jeff Swiatek, Sept. 30, 2011

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