You are not personally liable under these circumstances

1)      Is your business a corporation?

If so, you will not be personally liable for the debts of your business in most circumstances.

2) Are you a limited partner in a partnership?

In most cases, you will not be personally liable for the debts of your partnership.

3) Is your business a Limited Liability Company?

You probably won’t be liable for any of your business debts.

 You will be personally liable under these circumstances

1)      You will be personally liable for the debts of your business, even if it is a corporation, LLC, or limited partnership if you have…

a) made a personal guarantee on a debt.

b) cosigned on a debt.

c) commingled your business and personal liabilities.

2) Are you a general partner in a partnership?

You will be liable for the debts of your business.

3) Are you a sole proprietor?

Sole proprietors are personally liable for the debts of their business.

 What happens when I’m personally liable for the debts of my business?

If you are personally liable for business debt, creditors will be able to pursue you and your assets if your business defaults on any debt owed to a creditor.

 

Unfortunately, it is an all too common reality for the owners of a small business or members of a partnership to face problems with debt. And when it happens, they find themselves personally on the hook for the debts of their business. Even when you believe you are insulated from liability because of the structure of your business or partnership, many circumstances can arise while operating your business that will leave you without this protection and therefore, personally liable for debt.

If you find yourself personally liable for the debts of your business, bankruptcy can be the ideal solution for eliminating your debt, and moving on with your life. If your business is facing insurmountable debt but you feel you won’t be personally liable for it, you may still consider filing for bankruptcy. Many business owners in this situation file for bankruptcy to insulate themselves from possible, future lawsuits from business creditors. You should consult a bankruptcy attorney if you are a business owner or partner and considering filing for bankruptcy.