If your business is organized as a corporation or a limited liability company (LLC), your personal assets are usually protected from business creditors –unless you specifically gave up your so-called “limited liability” protection. Unfortunately, you may have done so if the bank or other creditor required a personal guarantee and/or personal security before loaning you money, leasing you space, or extending credit. We find this to be a very common practice. Such personal guarantees undo your limited liability by allowing the creditor access to your assets including personal assets if the business can’t cover the business debt.
So how do you know if you personally guaranteed a business debt? Well the first place to look is at the documents you signed when you were trying to establish credit or obtain a lease for the business. You may also want to reach out to any credit card company that you may have obtained a credit card for your business and see if you can get a copy of any credit application you may have signed with them. Once you have the documents an experienced attorney can look at them and determine if you guaranteed a business debt.
Bankruptcy for a business is more complex, most of the time, than a personal bankruptcy. Most bankruptcy attorney’s I know charge more for a business bankruptcy than a personal bankruptcy. This is especially true in case if you are going to try and keep the business operating during and after the bankruptcy – these kind of cases are usually Chapter 11 Bankruptcy cases or Chapter 12 if the debts are primarily farm or fisherman related. It is less complex, most of time, if you are merely closing the business and stepping away from it, in these cases a Chapter 7 case may be your best option.
Having problems with your business in Utah? Give us a call we have help hundreds of business owners through the bankruptcy process. Orem-Provo Utah Office: 801-221-9911.