I Own an LLC. Are the LLC’s debts my debts?
Operating a small company can be both rewarding and challenging. Many factors go into creating and maintaining a small company, but the most important is that it is adequately funded. Due to this, many small-business owners take out loans in order to ensure their business has enough operating capital when they start up and during their normal course of operations. This raises the question: Am I personally liable for these debts.
The answer will depend on a variety of factors, including how the business was organized. We will examine how small business owners operating under Limited Liability Corporations may or may not be liable for the debts of their company. Limited Liability Corporations (also known as LLCs) are the most common form of corporation in America. This broad limitation of liability includes, among others, a limit on liability for any business debts. This means that the debts owed to the business are theirs and not yours. The business is responsible for paying these debts, not the owner.
There is an exception to this rule. The primary one is that debts that are cosigned or guarantee by the business owner are treated the same as any other cosigned debt. If you cosigned or guaranteed debts for your LLC, then you will be jointly responsible for paying these debts. Some lenders, such as the SBA, will require personal guarantees for loans made to businesses. In general, the business owner is responsible for paying all debts. This leads to the next question: Can liability on these personal guarantee be discharged by a personal bankruptcy. This question is usually answered in the affirmative!
Personal guarantee on business loans is dischargeable in the same way as liability on a debt signed by a person. It is important to note that releasing the guarantee from the debt does NOT mean that the liability of the business is also released. The business will remain attached to the loan as it was before you filed for bankruptcy. Call Now for a Free Strategy Session with a MN Bankruptcy Lawyer at LIFEBACK LAW FIRMS
Small businesses can be financially and emotionally rewarding pursuits. Many of the best corporations in the country are small, local companies that serve their communities. Sometimes, however, circumstances may arise that make the continued operation of a small business unsustainable. Please do not hesitate to call us if you find yourself in a similar situation and would like to explore the possibility to release any personal guarantees that may still be tying your to the liabilities of the company. Our dedicated and experienced staff is here to assist you and would love to give you advice on how bankruptcy could be tailored to your specific circumstances. So, when the time is right, or when you are ready, please don’t hesitate to reach out to Minnesota’s most kind and helpful bankruptcy law firm by going now to
www.lifebacklaw.com
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