Do I Have Personal Liability For The Debts Of A Dissolved Corporation? Thomas Pedreira
Q.
My S corporation is being sued to collect a debt. The corporation is no longer in business. What is the best way to resolve this? Can they come after me personally to collect the debt? I need to respond to them in writing.
-- Dave
A.
The laws vary from state to state but, generally speaking, there may be grounds for holding you liable if you knew the corporation was out of business at the time the debt was incurred.
It is also possible that you could be held personally liable if the corporation was administratively dissolved after the debt was incurred. This may depend on whether or not you still have time to pay the required fees and penalties to reinstate the corporation and thereby avoid personal liability.
The best way to resolve this may depend on how much of a debt you are talking about. If, for example, it would cost more to reinstate the corporation than it would to pay off the debt or otherwise settle with the creditor, the latter may make the most sense unless you fear other suits coming down the pike after this one.
You should go talk to a consumer attorney or a bankruptcy attorney to get a better idea of what to do. Take relevant information and documents to the attorney so that he or she can tailor his or her advise to fit your particular circumstances.
Also, it is incumbent on you to respond to the complaint in a timely manner. Don't sit on this or you may waive your rights.
