Expert: Christine Janklow - 10/12/2008

Question
My partner and I took out a business loan for our LLC.  We are both in agreement the company is going nowhere and will probably dissolve it.  However, what becomes of the business loan? Who is responsible for paying for that if the company goes out of business?  My name is the only name on the paperwork for the business loan, but my partner is in agreement to do whatever we need to, but neither of us has the cash to pay this off in full at the moment and we dont want to keep incurring debts.  Do we file bankruptcy for the business? We need help with what to do next.

Answer
Joy:
Thanks for your inquiry. I do regret that your business did not survive and you find the need to close operations. As for your loan, if it is unsecured (non-collateral or SBA), then good chance the loan is negotiable and can be settled for less. The loan is apparently personally guaranteed (via your signature and listing as a borrower) on the loan docs. That said, if you can not or do not want to continue servicing the debt for years to come they may look to you to support and pay the liability. This is difficult to do if you are transitioning from self employment to something else. You could file Bankruptcy for the business, but as stated, you would also likely need to file personally. As well, the issue of complete dissolution is one that may require legal advice. By doing this now, you would be removing some of the protective statutes activated by opening your corporation and or entity. Prematurely removing this may create unnecessary exposure between you and your creditors, so get some legal advice first before doing so.

Your best bet may be to settle the debt, or hire a professional debt negotiations firm such as the one I represent to do this for you. Debt settlement is a process of controlled default then proper savings and negotiations to get your  creditors to accept settlement on the debt. I strongly recommend you look into both options and how this will affect you and your partner. You can seek legal advice by visiting your States attorney general website or visit www.findlaw.com for one in your area. I also would be pleased to speak with you about your situation and provide a no cost or obligation consultation if you decide debt settlement is more suitable for your needs. Simply ask a (mark it private) follow up question and include your contact information so I can get in touch with you. I wish you the best.

Respectfully,
Christine Janklow