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TJ, Esq.
TJ, Esq., Attorney
Category: Bankruptcy Law
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Experience:  JD, MBA
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I have a LLC,(located in Mass (a hearing aid dispensing practice)which

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I have a LLC,(located in Mass (a hearing aid dispensing practice)which after one year, is now $14,000.00 in debt (Business credit card 13K, advertizers 1K) and advertising and direct mailing haven't brought in many new patients..very little in assets (2K in equipment, $3,200.00 in unsold but unreturnable hearing aids.) Am going to close the practice. can I file bakruptcy to eliminated that $14,00. debt?.
Submitted: 8 years ago.
Category: Bankruptcy Law
Expert:  TJ, Esq. replied 8 years ago.

Hello and thank you for allowing me to address your legal question.

Yes, you can have the LLC file for bankruptcy, and it would eliminate the business’s debt. It will not affect you personally unless you personally guaranteed the debt. If you did, then the creditors will be coming after you. If you did not personally guarantee the debt, then you are not personally liable for it. In addition, your LLC's bankruptcy will not hurt your personal credit score.

However, in some cases creditors may “pierce to corporate veil” (or in your case, the LLC veil). This means that the liability protection afforded the owner will be ignored, and the owner will be held personally liable for the business’s debts. But this only occurs when there would otherwise be a gross inequity or fraud (for example, an owner can’t ignore the corporate laws when it’s to his advantage, and then later claim liability protection under corporate laws when he is discovered). It doesn’t sound like you have anything to worry about with regard to piecing your LLC’s veil, however.

If the information that I provided was helpful, please remember to ACCEPT my post as that is the only way I will receive credit and compensation for my answer. Thank you and good luck!

DISCLAIMER: Please understand that the complexities of most legal problems cannot be sufficiently addressed in this setting. Accordingly, my post is intended as general information only, and should neither be construed as specific legal advice, nor as an adequate substitute for the retention of legal counsel.

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