Q: Will I lose my home if my business files for bankruptcy? —Homeowner/Business Owner

A: Dear Homeowner:

As a business operator, the line of liability isn’t always clear. You could lose personal assets—such as your home—if your business files for bankruptcy, but it depends largely on the way you have legally structured your business and the type of bankruptcy.

For example, if your business is a sole proprietorship or general partnership, you are liable for your business as well as your personal debts. If you file a Chapter 7 bankruptcy, you could lose your home, but it will depend on how much equity you have and your state’s homestead exemption.

If your business operates as an LLC or a corporation, you have liability protection and are not personally liable for your the debts of your business, unless you have personally guaranteed those debts, as you probably did if you were taking on a small business loan, or even business credit cards.

If you need help protecting your personal assets, start by sitting down with a Family Business Lawyer™. A Family Business Lawyer™, can help you structure your business to minimize your personal liability.