My aunt entered into a shady partnership on accident, how can she avoid the bankruptcy that may come with it?

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My aunt entered into a shady partnership on accident, how can she avoid the bankruptcy that may come with it?

My aunt entered into a partnership with a slimy business man awhile back. She recently found out he has run it deep into bankruptcy, and was likely secretly taking money out. Now she is liable for the bankruptcy it sounds like. Are there any steps she can take to fight back and not lose everything she owns?

Asked on June 25, 2012 under Bankruptcy Law, Washington

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

You need your aunt to determine what her exact role was in the partnership.  If on paper she is merely listed as an investor, there will not be liability on her part. If she is listed even in state records (secretary of state) as a partner, then she needs to obtain an attorney to help her traverse the bankruptcy quagmire (from personal bankruptcy to partnership bankruptcy).  If she can or her attorney can show fraud, perhaps she may not be held liable for any of the partnership's debts.


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