Business Bankruptcy

[PamelaBrandy]

What is the name of your state? Maryland
I own a hair salon. It was doing fine now not so fine.
I am in a partnership with someone however, he does not know how far into debt we are because of bad decisions I made. If I file bankruptcy will he be held responsible for debt even though I made everything in my name only.
Will they touch personal assests to cover owed monies?

Thank you

 

[azatty]

It depends entirely upon how you organized your business. In a general partnership, both partners are personally liable for the business debts, meaning that personal assets of the partners are exposed. The answer is different for corporations, limited partnerships, and limited liability companies.

 

[GaAtty]

My guess is no, he will not be responsible. This is based on the fact that you described this business venture as a partnership, so I assume that means you never made a formal corporation. Based on that assumption, whatever you signed in your name you are liable for. Even if you purchased something in your company name, like Jane Doe purchased for ABC Partnership, you are still on the hook, not him. Absolutely yes, your personal assets are at risk because you DIDN"T make a corporation (next time be smarter--partnerships are not good for this reason). However, if you do a personal bankruptcy, your personal assets will be protected. The fact that your partner does not know about the true financial situation indicates that you both do not communicate well enough to be partners. Suggestion is to do your personal bankruptcy, if you have to, and then make a brand new baby corporation with you and him --- and run it correctly! (pay a business attorney for 30 minutes of time to tell you the RIGHT way). The new corporation will have new credit that you can help it establish and it won't be affected by your personal bankruptcy, as long as you don't personally guarantee any debts of the corporation. People will ask you to personally sign, but don't give in. However, before you do a new company, figure out what you did wrong in this one and don't do it again.