Your business is closing. You have a list of obligations to wind down: employees, landlord, vendors, taxes. Somewhere on that list is a copier lease with 28 months remaining. The monthly payment is $400, and you owe roughly $11,200. What happens to that lease when the business no longer exists?
The short answer: the lease obligation does not disappear. How it gets resolved depends on your business structure, whether you signed a personal guarantee, and how you handle the wind-down process.
The Personal Guarantee Changes Everything
If you signed a personal guarantee on the copier lease (and most small business owners do), you are personally liable for all remaining payments even after the business closes. The leasing company will pursue you individually for the remaining balance. This is not a theoretical risk. Leasing companies actively enforce personal guarantees, and the amounts involved ($5,000 to $25,000) are large enough to justify collection activity but small enough that litigation is cost-effective for them.
Check your original lease agreement. Look for language about “personal guarantee,” “individual liability,” or “guarantor.” If you signed a separate guarantee document at the time of the lease, that obligation survives the business closure.
LLC and Corporate Protection Has Limits
If your business is an LLC or corporation and you did not sign a personal guarantee, the lease obligation belongs to the entity, not to you personally. When the entity dissolves, the leasing company becomes an unsecured creditor with a claim against whatever assets the business has left.
However, if you strip the business of assets before dissolving (paying yourself, transferring equipment, emptying accounts), the leasing company can argue fraudulent transfer and potentially pierce the corporate veil to hold you personally liable. Wind down the business properly with an attorney’s guidance.
What to Do Before You Close
Contact the leasing company before you close the business, not after. Explain the situation and negotiate a settlement. Leasing companies would rather recover 40% to 60% of the remaining balance through a negotiated settlement than chase a defunct business through collections.
Offer to return the equipment in good condition as part of the settlement. A copier with 28 months of remaining lease value that the leasing company can re-lease has tangible value. Use that as leverage: “I will return the equipment and pay X months as a settlement in exchange for a full release of the lease obligation and any personal guarantee.”
Get any settlement agreement in writing, and make sure it explicitly releases you from the personal guarantee if one exists.
What If You Already Closed Without Addressing the Lease?
If the business already closed and you left the copier sitting in the old office, the leasing company will eventually contact you (or the building owner). They will demand full payment of the remaining lease balance plus any applicable fees.
Even at this stage, negotiation is possible. The leasing company’s alternatives are expensive: repossessing the equipment, pursuing legal action, and collecting through garnishment or liens. A reasonable settlement offer still beats those options for both parties.
What Most Guides Miss: The Equipment Itself Has Value
When a business closes, the copier often gets left behind or treated as worthless. It is not. A 2-year-old commercial copier in working condition has a resale value of $2,000 to $8,000 depending on the model. The leasing company knows this.
If you are negotiating a settlement, the resale value of the equipment should reduce your obligation. If the copier is worth $5,000 on the secondary market and you owe $11,200, your real exposure should be closer to $6,200. Make this argument explicitly. Get the equipment appraised if the leasing company disputes its value. For more on how personal guarantees work in copier leases, see our fine print guide, and learn about your rights when things go wrong at our broken copier lease guide.
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