What would happen if the person I buy a business from with seller financing declares bankruptcy after the sale?

If the seller declares bankruptcy before you have paid off the debt, the debt would become an asset of the bankruptcy estate.  You would get notice of the bankruptcy from the Court or whomever is appointed to administer the bankruptcy estate (probably a U.S. trustee), would make payments to that person, and the money would be distributed to the bankrupt's creditors.  Although there could be some red tape and bureaucratic holdups in the process, it should not affect your obligation to the seller. The problem is with the equipment lease, which may provide that a bankruptcy filing by the lessee (the seller) constitutes an event of default, entitling the lessor to various remedies, which may include repossession of the equipment, and or higher payments going forward.  You would probably be better protected if, rather than agreeing to make the seller's payment on the lease, you had the lease assigned to you with the lessor's consent.  That way the lease would be between you and the lessor, rather than the lessor and the seller, and the seller's problems should not affect you. Although you haven't specifically asked about them, some other concerns you should have are about the business's debts and liens against its property, which could affect how you structure the transaction.  If you are buying a corporation, for example (as opposed to buying the assets of the corporation), the corporation will remain liable for all of its obligations even after you have bought it.  Also if there are any liens against any of the assets you are purchasing, those liens will stay on even after the sale, and, if the lien holder is not paid, they could be foreclosed upon leaving you no recourse except to go after the seller, who may very well not have any money to pay you back.  You also have to make sure that there are no anti-assignment contractual provisions which could trip you up, such as a provision in a lease, if you are taking over a lease, which says that the tenants can't assign it. There are many traps for the unwary when you're buying a business.   Be careful.