If your company is running into debt problems, you may be considering business bankruptcy and other such options. You know that you need to find a way to eliminate this debt so that you can create a valuable financial future for the business. For instance, perhaps you are interested in reorganization bankruptcy, creating a repayment plan, or maybe you are thinking about liquidating assets through Chapter 7 bankruptcy.
One question that can come up at this time, however, is whether or not you are personally responsible for the debts held by your company. If you try to declare bankruptcy, for example, are creditors just going to start calling about your personal property? Could you be in danger of losing your retirement fund or your family home?
The business structure
In some cases, small business owners – such as someone running a sole proprietorship – could be responsible for debts that they take out on behalf of the business. That is because these debts have been acquired in their own name, so they are personally responsible.
But if you structured your business as a limited liability corporation (LLC), that means that only the business is liable for its own debt. Creditors could not take your personal property, so those types of assets are not at risk. In this sense, you could even declare bankruptcy and shut down the LLC without having to worry about future financial ramifications.
This process can be a bit complex, and it is important to know about all of the options you have when considering bankruptcy and other debt-related legal issues. It can help to work with an experienced law firm at this time.