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I Own an S Corporation and my Home is Now in Foreclosure. – Dave

“Dear Steve,

I own a small business which is an S Corp. Business was bad for awhile, during which time I got behind on the mortgage on my personal home. The home is now in foreclosure. Currently, I a considering an offer of a short sale, and I ade the decision to save the business, which has started to pick up.

My question is if the home is foreclosed how will it affect my business-the S Corp.? Would the mortgage company be able to come after the business for payment?

Dave”

Dear Dave,

Sometimes the easy questions can be the most difficult to answer.

In general, if all your business assets are in the name of the company then they are held by a separate legal entity. The business is not responsible for your personal debts.

I would think that it would be very remote that the creditor might try to pierce the corporate veil and make a run after corporate assets.

But you could get sued by the creditor, lose and wind up with a wage garnishment. You’d then have to garnish your own wages. Painfully ironic.

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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