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Business Debts & Personal Debts: When the Two Intersect

Binder labeled "Debts" with pen and calculator in front of it

t can be exceedingly difficult to separate our work lives from our personal lives. You may have a career that demands far more than the usual 40 hours per week, or you may have or have had two or even three jobs at a time. Unfortunately, this is not all that uncommon as citizens in the US are forced to work harder to keep up with the rising cost of living—resulting in higher expenses for lodging, food, medicine, health care, and just about everything you can think of. In spending so much time at work, you may often find yourself commenting that you feel like you live there—and if you are the owner or one of the partners, this is probably even more true. The people you work with may feel like family, and that may be extended to a lot of your client base too, especially as the years go by.

It is, however, important to separate business and personal finances. There may be years when you must make loans to your corporation or LLC and are able to see that come back to you later as you write it off on your taxes, but once debt enters the picture, make sure you are protected. If you are not, and a collections lawsuit or judgment is affecting you due to a business debt, consult with a skilled attorney from a firm like Fitzgerald & Campbell, APLC right away. Serious issues could arise, depending on whether you are involved in a sole proprietorship, LLC, corporation, limited partnership, or more.

While there can be complications if your corporation is in serious debt or sued, there is little protection for you if you have set up your business as a sole proprietorship. While there are many benefits in such a business set-up, there could be financial danger ahead for your personal finances if your sole proprietorship is being sued, or there is the potential for a judgment to be granted. If you have made a personal guarantee on a business loan for an LLC or a corporation, most likely you may be liable for that debt as well, and that means little distance between you and the repercussions that can arise from delinquencies, lawsuits, and judgments. This can be taken to the highest level as well if a creditor is able to garnish your wages, take your personal property to pay debts, or even worse, freeze your bank accounts and make it impossible to make withdrawals or pay other bills to keep your personal life organized.

Conversely, if a judgment has been granted against you for a personal debt, there is the chance that a creditor could attempt to see their debt paid with a charging order against your LLC or corporation, meaning they are entitled to your share of distributions or profit to pay off the debt. If you are concerned about such action, seek legal advice to find out what your best options are, whether that is in trying to negotiate and settle the debt, or fighting the original suit in court.

If you are concerned about impending creditor lawsuits or fighting a default judgment, consult with an experienced law firm like Fitzgerald & Campbell, APLC as soon as possible. A solution can be found to help you through any of these issues, even if a judgment has already been granted. Our attorneys have decades of experience in serving clients as they navigate through challenging financial situations, to include collection lawsuits, default judgments, and more. Let us review your case and discuss what would work best for you. We are here to help! Call us today for a free consultation at (844) 431-3851, or email us at

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