Shutting down LLC

Asked over 5 years ago - Indianapolis, IN

I have an LLC operated out of my home. I am on the verge of shutting down and/or filing for bankruptcy. Am I in any danger of losing any personal assests or personally responsible for any debts I can't pay because of having the company operated out of my home. Company and home have the same address. Thanks for your help!

Attorney answers (1)

  1. Margery Ellen Golant

    Pro

    Contributor Level 20

    Answered . So long as you maintained proper records and the separation between the two, there should not be a problem. That would mean, for example, that the LLC paid rent to you for the space it utilized, and that income to the LLC went into its own bank account, which was then used to pay the expenses of the company. If there were profits, they should have been distributed to you clearly as draw or sallary or distribution. If you lent the business any money to operate, or funded its operations at the beginning with your own funds, that too should be clearly delineated, and if it owes you anything, you should be listed as a creditor on the bankruptcy schedules.

    A favorite tactic of the debt collectors is to attempt to "pierce the corporate veil". What that means is that they may try to demonstrate that the LLC was not operated as a separate entity, that you commingled its debts and assets and income with your own. If that can be proven to the satisfaction of a court, that can then expose your personal assets to the claims of the LLCs creditors.

    Before you do anything, please go to see a local bankruptcy attorney who does BUSINESS bankruptcies (many bankruptcy attorneys focus on consumer bankruptcies, which are diffferent). Take your books and records with you and ask specifically for advice regarding the issue of your exposure to piercing of the corporate veil.

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