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If I File for Bankruptcy for my Business, Will My Personal Credit be Affected?

Closed_Skrupa LawAre you thinking of filing for bankruptcy for your business and wondering if this will also affect your personal credit? The expert bankruptcy attorneys at Skrupa Law Office, LLC in Omaha and Lincoln have an answer for you. Read on to learn more about when a business bankruptcy can affect your personal credit score.

Whether a business bankruptcy affects your personal credit depends on if you are personally and solely liable for the debt the business has incurred. This may be based on the type of business it is, and on whether you personally took responsibility for payment of debts accrued for the business. It also may depend on whether the business owed taxes, plus what kind of taxes were owed at your filing. 

Type of Business Owned

If you owned the business as part of a partnership, you as well as your partner are responsible for the debt acquired by the business. The partnership can file for bankruptcy for the business, but if you do not pay for the debts with the liquidation money, then both partners are still responsible for the debt. The creditor can report the debts under your name, although the debt will not show on your credit report because it is not a personal bankruptcy.

If you own the company as the sole proprietor, the law sees you and your business as the same, and you will be held responsible for all debts accrued by your business. In order to wipe out the debt of the company, you will have to file for personal bankruptcy, and therefore, your personal credit will be affected.

Exceptions – There are always a few

Skrupa Law wants to inform you of the exceptions that fall under the LLC, corporation, or limited partnership that could affect your credit. If you signed a personal guaranty from a creditor at your business, then you are responsible for those debts. Even if the business files for bankruptcy, you are still required to pay those debts or it will be reported to the credit bureaus and have a negative impact on your credit.

Another exception is business taxes, which you are expected to pay as well. If you collected taxes from employees and did not turn these fees over to the government, then you will be held responsible and it could affect your credit.

Contact Skrupa Law at (402) 571-2900 (Omaha) or (402) 464-3311 (Lincoln) Today!

Our expert bankruptcy attorneys at Skrupa Law are here to help you understand business bankruptcy better. If you have any questions concerning bankruptcy and what your options are, contact our Omaha office at (402) 571-2900 or in Lincoln at (402) 464-3311.

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