Business Debt Which Becomes Personal
People who operate their own businesses often think of that business and themselves as being a single entity. If the business is a distinct corporate entity, that entity has its own assets and its own debts. However, in most situations, the debts of the business are personally guaranteed by its owners. If the business entity loses money, the owners usually end up with substantial personal debt, often because they have poured their personal resources into the business to get it started or to keep it alive in difficult times.
That is the situation in normal times. However, since 2020, individuals and businesses have faced unprecedented upheaval over a number of years. As a result, countless small businesses were forced to close either temporarily or permanently and their owners left to deal with the debt hangover.
When Business And Personal Debt Are Linked
If a corporate entity is put into bankruptcy, its unencumbered assets are liquidated and there may be partial payments made to its creditors. That does not resolve the personal debt, which is the fallout of most business closures. If you have a business that is building up your personal debt, you should not wait to consult experienced bankruptcy attorney Doug Wickham. He will put his knowledge of bankruptcy law to work for you and help you determine what is the best way to close (or perhaps reorganize under Chapter 11) your business and to deal with the personal debt which it has built up.
Congress recently enacted a new, more debtor-friendly form of Chapter 11 business reorganization. Both corporate entities and individual persons can use it. If COVID-19 has impacted your small business, you should consult an experienced bankruptcy attorney. Contact Doug Wickham from this site, or call him at 919-944-4913.
Wickham Law is a debt relief agency. The firm helps people file for bankruptcy relief under the Bankruptcy Code.