I can’t pay my business card which is a LLC. Would this effect my personnal credit history and what is the worst that can happen to me ?

I can’t pay my business card which is a LLC. Would this effect my personnal credit history and what is the worst that can happen to me ?

Asked on May 18, 2009 under Business Law, New Jersey

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

See this link: http://business-law.freeadvice.com/corporations/incorporation_LLC_S.htm

The benefit of an LLC provides protection from individual liability subject to certain exceptions.  I don't know what you mean by what is the worst that could happen to you.  It depends on if the creditor decides to sue you personally and if you can show that absent any exceptions, you are not personally liable for such debts.

Further, here is some information from the New Jersey Secretary of State's office:

http://www.nj.gov/njbusiness/starting/basics/limited_liability.shtml

 

New Jersey Statute 42:2B-1 et seq. handles all matters concerning Limited Liability Companies.

42:2B-9.     Members', managers' rights, obligations 
    9.   Except as otherwise provided in an operating agreement, a member or manager may lend money to, borrow money from, act as a surety, guarantor or endorser for, guarantee or assume one or more specific obligations of, provide collateral for, and transact other business with a limitedliabilitycompany and, subject to other applicable law, has the same rights and obligations with respect to any such matter as a person who is not a member or manager. 

   L.1993,c.210,s.9. 
 
42:2B-10.    Indemnification powers 
    10.  Subject to such standards and restrictions, if any, as are set forth in its operating agreement, a limitedliabilitycompany may, and shall have the power to, indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever. 

   L.1993,c.210,s.10.  
 

J.M.A., Member in Good Standing of the Connecticut Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

I would need to know more information.  For instance, did you sign for the card personally as well as on behalf of your busienss?  if you signed personally and fail to pay, then you can risk being sued and having your credit affected.  If you only signed on hehalf of the business, then only the busirness's credit is at risk and can be sued.  I suggest finding out as it will determine what legal exposure you have.


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