If your Tennessee business has been in the red for a while, and if you have been unable to make payments toward your debts, the creditors may start to come around. The way in which you structured your business, and whether or not you or your business placed any guarantees on your debt, will determine how much creditors can collect from you. FindLaw explains your various options for dealing with unpaid business debt based on the type of debt you have and how you structured your business.
If your business is a general partnership or sole proprietorship, you have few legal protections. Under both structures you and, if applicable, general partners, are personally liable for any debts your business accrued.
If your business is a limited liability company or corporation, however, there is little chance you will have to assume personal liability for the business’s debts. However, you may have unwittingly forfeited this protection at some point during your business ownership. Though this can happen in many ways, one of the most common is when a bank refuses to grant you a loan without a statement of personal liability or personal guarantee. If you granted either, the bank can come after you personally for repayment.
Regardless of how you structured your business, you always have the option of filing for bankruptcy. Bankruptcy may be the best option if you owe money to multiple creditors. However, before you file, you must give bankruptcy a lot of thought, as you may lose assets and property you wished to keep. You should also consider the various types of bankruptcy for businesses, which include Chapter 7, Chapter 11, Chapter 13 and Chapter 12.
You should not use this article for legal advice. It is for informational purposes only.