QUESTION

Are creditors able to come after you for debt that was acquired prior to establishing a sole proprietor ship?

Asked on Apr 07th, 2012 on Business Law - Wisconsin
More details to this question:
My husband and I have some debt and we are looking to establish our business. He will be the sole proprietor but before making that decision on the legal structure of the business we need to know what is best. We have every intention to ay off our debts but we just don''t want them coming after us unexpectedly.
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1 ANSWER

Litigation Attorney serving Greenwich, CT
Partner at Hilary B. Miller
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Unless discharged by bankruptcy, barred by an applicable statute of limitations, or otherwise voided or set aside, you remain liable for your prior debts even if you start a new business -- regardless of the form of that business. If the new business is a sole proprietorship, the assets of the proprietorship will be subject to the claims of the proprietor's creditors, including creditors who acquired their claims prior to the formation of the proprietorship. There may be ways of making arrangements with the creditors so that they do not seek to attach the assets of your husband's new business. Those kinds of arrangements are best made through an attorney. They will, in any event, depend on the voluntary cooperation of the creditors.
Answered on Apr 08th, 2012 at 4:36 AM

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