What should be do regarding a business bankruptcy?
Question Details: My husband and I bought a franchise license for a smartphone repair store. After a 1 1/2 years of being open, we are just not making it and need to cut our loses. We bought a franchise license which cost 30K and then spent an additional 110K in buildout costs to open the store front. Then spent another 80K in just the operational/overhead costs between now and then, to help keep afloat. In addition, we are 20K in over our heads on credit card debt. It's just not working and don't know what else to do other than file for bankruptcy. This has taken a toll on our family, our health, mental state and it's just not worth continuing. What steps do you recommend we take from here, if we do file for bankruptcy? We cannot afford to spend any more money on this. My fear though with bankruptcy is could this go on our personal credit? We opened the business under a corporate business entity. Also, will the 20K credit card debt need to be repaid?
1) The bankruptcy of a corporation will not affect the credit of owners or employees of the corporation. The corporation is a separate legal entity or person.
2) Remember though, that if you personally guaranteed any debts, or signed any leases, contracts, etc. in your own name rather than the name of the corporation, you are personally liable, and the corporate bankruptcy will not discharge the debt.
3) Credit card debt is the personal debt of the person to whom the card is issued, even if a business name is also on the credit card and even if the business paid the credit bills for you. Therefore, you will have to pay the credit card debt or file personal bankruptcy to discharge it.