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Personal Bankruptcy Liability for Corporate of LLC Debt

When an individual is thinking about going into business they have choices as to how they want to register the company. They could go as sole proprietor or general partnership, or they can incorporate it of make it a LLC. One of the reasons they often choose incorporating it is because they want it to 

When an individual is thinking about going into business they have choices as to how they want to register the company. They could go as sole proprietor or general partnership, or they can incorporate it of make it a LLC. One of the reasons they often choose incorporating it is because they want it to be a separate entity. Thinking that by doing so they will never be personally responsible for the business debts. If they had to go bankrupt that it would be the business doing so, and not them personally.

Sometimes business owners who have incorporated or gone with a LLC are shocked to discover they may be held financially responsible for some of the business debt.

It is always a wise choice to use the services of a New Albany bankruptcy lawyer no matter when one is going personal or business bankrupt. The bankruptcy laws can be complex, and confusing, and it takes one that is experienced in this type of law to decipher it.

When the business is considered a separate legal entity, it means it can own property, complete contracts and enter into our business dealing, all of which the business is responsible for. So when the business is going bankrupt the creditors will go after any of the assets that the business has purchased or owns. However, if one of the business owners puts up a personal guarantee for any of the business debts then he is now personally liable for that debt. This is something that should be avoided whenever possible.

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