Owning and operating a company can be extremely difficult, yet be that as it may; it is often far more difficult to close the company. Many people may struggle with paying off what they owe through the company while keeping their personal credit score high. There are certain things one can do to deal with this issue in a credit-conscious manner. First, ask the question,
Are you even liable for the debt in the first place?
In terms of debt from vendors, I would assume that you’re not liable. However, if we’re talking about credit card debt, that is, debt on a business credit card, there are two ways to determine liability. First, if the business credit account was created with your personal social security number, the chances are good you will be personally liable for the business account.
Second, if in the credit card agreement, there is a clause explicitly stating that you are responsible for any outstanding balances in the event of default, I’d take that as a pretty good indication that you’ve got to cover the debt.
Once you figure out whether you’re liable, the next step is to shut down the business.
If you’re not personally liable for the debt, then hey, throw a party, pop the champagne cork, and watch the flames of your former workplace lick the night skies (disclaimer: don’t actually burn any buildings down; It’s a lot tougher to dodge the blame for that). While filing bankruptcy is not necessary, at this point, it can be a good way to let creditors know what’s happening, or not happening, with the business – sort of funeral, if you will. In addition, it would be wise to officially close the business in cooperation with state law, as additional fees can be incurred otherwise.
If you have more questions to address before you make your final decision regarding how to deal with your business, your debt or your credit, please get in touch with the southern California bankruptcy attorneys at Westgate Law.