Am I personally responsible for debt incurred by my now closed Corporation?

Asked over 2 years ago - Chestnut Hill, MA

I was the sole owner and officer of a sub-S corporation, that I closed over a year ago. I still have open, unsecured debt that I have not been able to pay off and some of the vendors are now filling small claims action. Can they come after me for payment or just my company? Can they collect from property that is owned by my wife, or jointly with my wife?

Attorney answers (4)

  1. William T Harrington

    Contributor Level 14

    11

    Lawyers agree

    Answered . It depends on who entered into the contract. If this is contract debt, like failing to pay a bill, did you personally enter the contract or did the corporation. I would look at the invoices and any other contract documents. Also, if the corporation was the party, did you personally guarantee the debt? If so, you will be on the hook. Also, keep in mind, if you are sued, even improperly, you need to respond to the complaint and can't simply ignore it.

  2. Robert John Murillo

    Contributor Level 20

    9

    Lawyers agree

    Answered . My colleague provided an excellent answer. I would only emphasize how important it is to respond to any suits and to retain or at least get advice from an attorney prior to your answer. Most pro se defendants (people who are not represented by legal counsel) miss any number of defenses and counterclaims to the detriment of their defense. These mistakes reduce your options and negotiating leverage.

    Do not be penny-wise and pound foolish. If you are served with a lawsuit, speak with an attorney.

    This answer is for informational purposes only and is not legal advice regarding your question and does not... more
  3. Christopher Joseph Fein

    Contributor Level 12

    5

    Lawyers agree

    Answered . Both prior answers were very well written. I would only add that you could potentially eliminate the claims by the filing of a business bankruptcy. It would not eliminate personal liability, if it were to exist, but it would eliminate your need to pay off debts which might be entirely dischargeable.

    The content of this message does not constitute legal advice and is not intended to be relied upon by anyone. It... more
  4. Christopher W. Vaughn-Martel

    Contributor Level 17

    2

    Lawyers agree

    Answered . If you have been sued, you have only 20 days to respond. You should take your paperwork to an attorney. The entity responsible for the debt is the entity who contracted for it. If it was the corporation, then generally the corporation is responsible. There are exceptions even to this rule, however. If you or your wife signed a personal guarantee (this is likely) then you and your wife may be responsible for the debt.

    Take your paperwork to an attorney to get the lay of the land.

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