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Will I Be Responsible for My LLC Debt When it Folds? – Lisa

“Dear Steve,

I own an LLC in Phila, PA (I live in NJ). Can i be held personally responsible for any debt incurred by the LLC? Such as, we had a credt/cebit card machine that according to them (RBS World Lynx) was terminated early and they are billing for almost $800.

The business is doing poorly. I am thinking of dissolving it. We do not owe any others, just RBS. I don’t want to ditch the debt but they want payment in full ASAP and are threatening my personal credit. Can they do that? Also, when i looked up my credit several months ago RBS showed up as closes and paid in full. What’s the point of an LLC then?



Dear Lisa,

The real issue here is what the RBS agreement said. Most small and medium sized business owners are required to personally guarantee their company debts. It’s in the fine print. This is because most creditors know that the chances of a business being successful are small. Most businesses will fail within five years.

Why don’t you just ask RBS to show you where you would be personally responsible for this debt. If they can’t then the debt will die with the LLC. But, when you close the company you may be asked to certify that all debts have been dealt with.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

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About Steve Rhode

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.
  • Lisa

    After several telephone calls back and forth it was found that yes, there was a contract that was not signed. I knew there was no way I would have singed anything that held me personally responsible for any debt incurred by the business, it was the same reason we do not have a line of credit or any credit cards. I value my credit as much as anything else of value. When you get right down to it, credit is all the working man has!Steve………thank you again!

    • Steve Rhode


      Happy to help.

      When the time is right think about this. If you want to keep or improve your credit you need a credit card or two. You don’t have to carry a balance but you need to show you can be responsible for unsecured credit.


  • Lisa

    Steve, upon further investigation I have found I have no contract with the credit/debit card carrier. A friend had already owned the machine and gave it to me. They did not even come to the office to hook it up, we did it al my telephone. They still insist I owe $800.00


    • Steve Rhode


      Hum. For $800 it might be worth spending $300 to get a lawyer to send them a letter. If there is no support for the debt it may kill it then and there.


  • Jeremy

    I learned the hard way shortly after college. I had a business and even created a corporation, but was not aware that my “business” credit cards at the time had a personal guarantee tied to them. Needless to say, the business failed and was shocked to find creditors calling and suddenly my credit score trashed due to late payments.

    Chalk one up for learning the hard way!
    .-= Jeremy´s last blog ..Avoid a Financial Holiday Hangover This Year =-.

    • Steve Rhode


      The business card thing is a evergreen gotcha. The lenders bill it as a business credit card and ask you to put the business name on it but way down in the fine print…well you know.

      Thanks for the comment.


  • Lisa

    Steve, thank you so much for a quick and accurate response!
    You’re the best. So glad i stumbled upon you!

    • Steve Rhode


      Glad I could help.


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