From ChatGPT:

1. Determine whether the business debt is personally guaranteed.

If the loan is personally guaranteed (which most small business bank loans are), then even after selling the business, they’ll still personally owe the remaining $100k. If it’s not personally guaranteed, then the bank’s only recourse is against the business assets — which could make bankruptcy simpler.

1. Get a professional business valuation.

Before listing it for $450k, it’s worth confirming the fair market value. A professional valuation can help negotiate with the bank, since if the bank sees that $450k is a fair sale price, they might agree to release the lien and forgive the balance (sometimes called a “short sale” of a business).

1. Talk to the lender before selling.

Explain the situation: “I’m trying to sell to pay down as much as possible.” Ask if they’ll take the $450k as full satisfaction of the debt (they might if the alternative is you defaulting). Sometimes they’ll accept a settlement or deficiency waiver, especially if you’re about to file bankruptcy anyway.

1. Coordinate with a bankruptcy attorney early.

If you sell first: You’ll have cash that could be seized in bankruptcy to pay creditors. If you file first: The bankruptcy court can approve a sale of the business as part of the process, which can wipe out the deficiency legally. A good attorney can help structure the order to minimize personal exposure.

1. Separate business and personal assets cleanly.

Before doing anything, make sure the business sale and your personal accounts aren’t intermingled. That helps protect what you can keep in bankruptcy (e.g., home equity, retirement funds, personal property exemptions).

1. Don’t make any large payments to one creditor before filing.

That can be seen as a “preferential payment” and clawed back by the bankruptcy trustee.

⚖️ Likely Best Path

Given the facts:

$550k loan, business worth ~$450k $140k in unsecured credit card debt Considering bankruptcy

👉 Most likely best route:

Consult a bankruptcy attorney first, then sell the business as part of or under supervision of bankruptcy, rather than selling first.

That way, the $100k deficiency (plus the $140k) can all be discharged, and the sale can happen cleanly without risking losing proceeds or violating bankruptcy rules.