Question: I started a business about 3 years ago in my basement in Johns Creek. I spent a lot of money trying to get the business going. I borrowed money from family, friends and I got a few bank loans. I also used some credit cards. The business looked like it would be very profitable but then things went bad because I couldn't fill orders fast enough and I discovered that my product was actually unsafe.
So now I have huge debts. I got a letter from a collection agency yesterday and I'm getting harassed by phone calls from debt collectors. Basically, I need bankruptcy protection so I can get rid of this debt and then start over again.
I thought about debt consolidation but then I read that debt consolidation is a scam and that the only way to really get rid of debt is by filing bankruptcy.
The debt is all in the businesses name. None of it is in my name. I got to put it in the businesses name because I was the CEO of a large company so the banks and credit card companies let me borrow the capital in the name of the business only. I used those relationships to help start my own company.
I'm writing to ask if my company files bankruptcy will that mean that I have to file bankruptcy personally.
D.A. in Johns Creek
Answer: If the debt is in the name of the company, then you would not be implicated personally. Many companies take advantage of the bankruptcy laws to get a fresh start by filing chapter 7 bankruptcies. In other words, the business can file bankruptcy and you, personally, would not be involved. Even as an officer of the company your personal credit should not be wounded if the business files bankruptcy.
Sometimes business debt is incurred by a business owner or officer and that individual may want to file a personal bankruptcy to eliminate their debt. Other times, as in your case, a business bankruptcy will eliminate the outstanding debt.
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