0020 - Debt Related Queston: Bankruptcy Question # 0020

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QUESTION #0020:

My business isnít making as much money as I had expected, and I have had to use my personal credit to cover expenses, like wages and supply costs. My personal debt seems to be growing faster than my business can pay me. What can I do?



ANSWER:

Using personal credit to fund the operating expenses of a business is not an ideal solution. In a sole-proprietorship, all debts are personal debts, but for a Limited company the company is considered a separate debtor, and only debts for which a personal guarantee are given, or a Directors liability exists, would be classed as your personal responsibility. If personal credit is used to pay the expenses of a Limited company, you will be held personally responsible for repayment, even if the company is closed or sold. For a sole-proprietorship, as you would be responsible for repayment anyway, it doesnít seem as bad, but if the business isnít making enough to operate and pay you a living wage, then your only option may be to obtain an alternate income (regular employment) to sustain operations