Liability for Business Debts
There is a big difference between debts that only your business owes and debts that you (and perhaps your spouse) are personally responsible to repay. Understanding which debts you are personally liable for will help you determine whether to take them on in the first place and how to deal with them if you can't pay them. While deciding not to pay any business debt comes with consequences, not paying some types of debt has worse consequences than not paying others. Knowing which is which is vital to protecting your personal assets.
Ignoring any business debt comes with consequences, but not paying some types of debt has worse consequences than not paying others.
When a business closes, it usually has a good-sized pile of debts—to landlords, suppliers, utilities, service providers, and possibly a bank or private lender.
Debts and creditors fall into different types of legal categories, meaning that some of your creditors have more rights to collect and a bigger ability to negatively affect you and your business than do others.
Learn whether a business creditor can come after your house, bank account, or other personal property.
Business debts that you share with another person—a spouse, partner, or cosigner—can raise some legal issues if you can't pay them.
If your business is in the red, take steps to protect your personal assets.
An LLC or corporation's owners, members, or shareholders may be on the hook personally for business debt.
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