Q: I own an llc that is in terrible debt. Can I sign it over debt and all and walk away??
Just curious if I sign the LLC over will that transfer the debt to that person as well or will I still be responsible. The LLC is almost 3 years old and has not shown a profit. I want to claim bankruptcy but someone else wants to take on the ownership and debt but not pay me anything... I would just walk away
A: As a general rule, the debt belongs to the entity, not you, so you (personally) would not be liable for the debt. In this case, you could just walk away. HOWEVER, there may be other issues that might prevent you from doing this. If you signed a personal guarantee, then you would be still liable for the debt (both you and the LLC would remain liable). There may also be ways to "pierce the corporate veil" for creditors to hold you liable for the LLC's debt. There may be other reasons why you would remain personally liable (for example, for some types of tax debts). This is a fact specific question and you'll want to speak to an experienced attorney that can review your situation in detail to determine how you should proceed.
Timothy Denison agrees with this answer
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