Legal Question in Business Law in Washington

Re: Business Debt Collection

Individuals commonly form business entities (incs., llcs, etc.) to shield themselves from personal liability in the event the company fails and has to fold. However, because of this precise reason, many creditors require personal guarantees from the shareholders or members of a company before providing it with a line of credit, credit card, bank loan, etc.

The bigger your business gets, with more assets and history, the less likely a creditor will be to require a personal guarantee.

I can't say for sure about your two credit cards, but I suspect that you personally guaranteed the credit cards upon signing the credit application. Credit Card companies are notorious for requiring personal guarantees.

Unfortunately, this means that you are liable for the debt personally as if the card was issued in your name.

It may be possible to settle the debt, file for personal bankruptcy, etc. - in other words, you have some options. However, the corporate entity will not likely protect you in this scenario.

Ask to see the "personal guarantee" before making payment.