If you own a corporation or LLC, it is almost certain that you need bankruptcy to get rid of debts incurred by your company that your company cannot afford to pay. Why? Because banks don’t lend money to small corporations or LLCs without the owners personally co-signing for those loans or otherwise personally guaranteeing them.
One of the advantages of owning your business as a corporation or LLC is that you are not generally liable for the debts of the company. (There are exceptions, but that’s another topic.) If the company is unable to pay its debts, the creditors may go after the company for those debts, but generally may not the owner personally. Banks don’t know and trust small companies enough to lend them money without also making the owners liable for those loans. So when you sign as a co-debtor or a guarantor for the company’s loan, you are equally liable for it.
If your company is in dire financial straits and you are willing to let the company close, the company generally does not have to file bankruptcy. Once the corporation or LLC goes out of business, there is no one from whom a creditor can collect the debt. However, if you cannot afford to pay those business debts personally, you should strongly consider filing bankruptcy to get rid of them and get a fresh financial start.
If you have business debts for which you are also personally liable and which you cannot pay, contact a bankruptcy attorney today. Don’t let a failed company become a zombie company by continuing to haunt you with its debts!