Would I Be Personally Liable for Business Debt in Bankruptcy?

Discharging Debt

As an individual, being responsible for business debt in
bankruptcy likely depends on the structure of your business. In some cases it may
depend on how it was developed or formed. Many who seek to file for protection
may operate a business as a sole proprietor, partnership, corporation
or limited liability company (LLC).

If you are the sole business owner of your business, meaning it is not
incorporated or known to be formed as another business entity, it is likely
considered a sole proprietorship. This is often considered one entity
since you and the business are considered the same. Debts incurred in
this case would be solely by the owner. Creditors can chose to pursue
personal or business assets to satisfy outstanding debt. In such a case,
the creditor may pursue personal assets if there are limited business assets.

A partnership can vary depending on the type. A general partnership may
include two or more people in which they could be responsible for debt
incurred if each person is considered a general partner of the business.
A limited partnership may have only one general partner who may be responsible
for debt, while other members would not have such responsibility. Creditors
could pursue personal assets of the general partner and not the others
who are considered as a limited partner.

An LLP may vary depending on the state you live in. Some may operate where
all partners have no personal responsibility while other states may require
you to have one general partner who could be liable for debts such as
credit cards or business loans.

Reference:
http://www.nolo.com/legal-encyclopedia/personally-liable-business-bebts-business-bankruptcy.html

By | 2017-12-13T02:13:59+00:00 August 27th, 2013|Bankruptcy|Comments Off on Would I Be Personally Liable for Business Debt in Bankruptcy?