Am I Responsible For Business Debts If I File For Bankruptcy?
If your business is incorporated, you may still have personal obligations for certain debts as follows:
- Debts that you personally guaranteed. Commonly, shareholders provide personal guarantees for bank debt and equipment or vehicles financing or leases. In addition, some suppliers may require personal guarantees.
If you are a director of an incorporated business, you may be jointly and severally liable with the Company for certain debts. The most common debts that fall into this category are government obligations for unremitted payroll source deductions and HST, both including penalties and interest. Also, directors are generally liable for environmental damages caused by the Company. Corporate income taxes are not a personal obligation of the directors.
If you operated your business as a sole proprietor then you are personally responsible for the debts of that business. If you are a partner in a partnership, you are jointly and severally liable for the all of the debts of the partnership, not just your proportion.
Individuals with businesses often require debt resolution solutions that resolve both personal and business worlds at the same time and it is difficult to fix one without dealing with the other. Consultation with a trustee experienced with businesses is important.
Powell Associates Ltd. is a Licensed Insolvency Trustee (LIT) focused on providing debt settlement, proposal and bankruptcy solutions for individuals and businesses. We offer free consultations to review your personal financial situation and practical debt resolution options. Contact us to discuss your situation over the phone or book an appointment to meet us face-to-face in Saint John, Moncton, Fredericton, Charlottetown or Dartmouth - it's your choice.