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Lucy, Esq.
Lucy, Esq., Attorney
Category: Business Law
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Experience:  Attorney
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I have a business line of credit(solely under the business

Customer Question

I have a business line of credit(solely under the business name) and it does not show up under my personal credit report. I may default on the business line and want to know if the bank can go after me personally. There is a clause in the contract that allows for "15%" of legal fees in case of default so that worries me as well.

If I simply close the business or declare bankruptcy for the business, would that help?
Submitted: 2 years ago.
Category: Business Law
Expert:  Lucy, Esq. replied 2 years ago.
Hi,

My name is Lucy and I'd be happy to answer your questions today.

Is the business an LLC or a corporation?
Customer: replied 2 years ago.

It is an LLC.

Expert:  Lucy, Esq. replied 2 years ago.
Thank you.

Unless you signed something specifically agreeing to be personally liable, you are not responsible for the LLC's debts. Provided that you keep business assets and accounts completely separate from your own, creditors of the LLC cannot come after the owner for payment. They'll have to try to collect from the company.

If you have any questions or concerns about what I've written, please reply so that I may address them. It's important to me that you are 100% satisfied with the service I provide. Otherwise, please rate my service positively so that I get credit for answering your question. Thank you.
Customer: replied 2 years ago.

Business accounts and assets are filed separately but taxes are filed together. Do you think that makes a difference?


 


 

Expert:  Lucy, Esq. replied 2 years ago.
As long as the LLC is a separate entity, registered with the state, and has separate records and bank accounts, the owner(s) are not liable for the debts of the business.

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