Question: I have a small business, and unfortunately I have encountered debts that were sent to a collection agency. Can they go after my business and myself personally? I have explained my hardship with this economy, and would like to set up a payment plan to pay them off. Will my credit still be affected by this? And, if so, what is the upside on paying this debt?
Answer: My answer assumes your business was organized as a sole proprietorship. I reach this conclusion because your question does not mention any business partners, which would imply your business was organized as a partnership. If you had organized your business as a corporation the attorney who set up the corporation would have explained that corporate officers and stockholders enjoy limited liability when a corporation is organized and financed properly. There are also variations on partnerships and corporations that combine the characteristics of both, but those are irrelevant for the purposes of this question.
The recession might be ending soon, depending upon which economists and other financial forecasters you believe. But, that doesn’t mean that people aren’t still looking to save money. In fact, if one good thing comes out of this recession it will be that people have been reminded that money isn’t free, credit isn’t always easy to get, and saving for emergencies and opportunities is more important than remodeling the kitchen.