November 2nd, 2007 | 
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Kevin G asked:
If it is legal, and the personal debt is now business debt, am I still responsible for the business debt?
OK Serge. What if I incorporate?
Suzy Granato
If it is legal, and the personal debt is now business debt, am I still responsible for the business debt?
OK Serge. What if I incorporate?
Suzy Granato
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If you are paying yourself within the business, you can do whatever with the money as you so please. You would still be liable to pay off the business debt, though.
Yes it is legal although there would be no good reason to do so. You are responsible for your debts and also for the business debts, unless you form a corporation. Your personal debt does not become a business debt simply by opening a business. They remain your personal debts. And as the business owner, you are personally responsible for your business debts as well.
Even if you incorporate, your lenders are going to want you to personally guarantee any debt the business incurs. If your business has no assets, you don’t have any colateral so you will be responsible for the debt. You can’t just open a business and assign all your debt and walk away – it doesn’t work like that.
Whether its legal or not does not matter in this situation because it will not accomplish the objective you are seeking. Any new business will be required to have personally guarantee from its owner.
You will still owe this debt.
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