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Is My Spouse Liable In My Business Bankruptcy?

There are times when an individual that owns a business has found that they are at a place where they may need to go bankrupt and are concerned how this is going to affect their spouse. There is a possibility depending on how the business is structured that this form of debt relief could have an effect on the spouse.

Debt Liability

As a sole proprietor or general partner of your business this means that you are personally liable for the debt of your business. Because you are personally liable this means that your spouse would also be responsible for the debts incurred by the business. Many times it is a business that is owned by man and wife and this forms a general partnership which means that both individuals are equally responsible for the debt. If your business happens to be a Corporation however, then this should not affect your spouse as a corporation or limited liability company is considered as a separate entity. When these types of business are going bankrupt they are filing separate from the owners.

Where one has to be careful here is whether either of you a guaranteed or co-signed a business debt. Going bankrupt for a business can be quite complex and distressing. Individuals that are taking this route of financial relief would do well to depend on the expertise of an experienced bankruptcy attorney.

There can be common law relationships that can come into play with this depending on the state rules concerning bankruptcy. If there is a concern about debt liability, let your Indiana bankruptcy lawyer guide you through the entire process, and start with letting you know what you can expect will happen during your bankruptcy process.

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