Q: What happens when you declare bankruptcy for your business? Will they come after personal assets?
A:
If your business is a sole proprietorship, then yes, when you file for bankruptcy relief, all assets and liabilities of both you and your business are submitted to the bankruptcy court and subject to the claims of creditors.
If your business is in corporate form, and you've been careful to follow the "corporate formalities", e.g., keeping written minutes of meetings of shareholders and directors, have bylaws which you follow, and have duly registered your business as a separate entity, and have filed separate tax returns, you should only be exposed to corporate debt if you have guaranteed those claims, in writing.
"Will they come after personal assets?" Any person, including any creditor, is free to assert whatever claim they like in court, but the key is whether they can sufficiently prove what they claim. There is no available "order" of the court to prevent that.
Timothy Denison agrees with this answer
A: Forgot to mention- if your business has been operated as a partnership, with you as a general partner, then you will be personally liable for any unpaid partnership debts. That is true even though a partnership is deemed to be a separate legal entity, entitled in its own right to file for bankruptcy relief (it is not, however, eligible for a discharge of unpaid debts).
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