MONEY-BACK GUARANTEE FOR DEBT RELIEF SERVICES.
That’s one of the many reasons Delancey Street is a top-tier business debt relief company. We offer a money back guarantee for our debt relief services because we understand how risky business debt can be, and how much you need real solutions.
But here’s the big question: Should you dip into your personal checking account to save your company from going under?
Regardless – we can help you.
Below is everything you need to know before you do anything.
The U.S. Small Business Administration (SBA.gov) and Federal Trade Commission (FTC.gov) both explain how personal liability can arise when business owners mix personal and business funds. It’s important to understand the potential penalties, laws, and possible pitfalls that might apply if you raid your personal savings to pay business creditors.
Why does this matter?
Because it could backfire. Let’s break it down.
The Legal Landscape: Mixing Personal and Business Funds
When you use personal funds to pay off business debt, you may unintentionally trigger “piercing the corporate veil” scenarios—especially if you have an LLC or corporation. It means creditors can argue you’re not truly separate from the business, possibly exposing your personal assets to liability.
Key Laws and Penalties to Know:
- State Corporate Laws: Many states have laws that protect you from personal liability—unless you’ve commingled finances. Once you do, it’s a potential open door for a lawsuit seeking personal assets.
- Personal Guarantees: If you signed a personal guarantee on an SBA loan or merchant cash advance (MCA), using personal funds might fulfill your obligation early—but also might encourage creditors to come after other assets if they sense deeper pockets.
- Tax Implications: Per IRS.gov, mixing personal and business monies can complicate tax filings. You might lose certain deductions or face audits if your records become unclear.
One solution is to reach out to a business debt settlement company like Delancey Street rather than reaching into your own wallet. This means you can save money, and avoid going into personal funds.
COJs, Lawsuits, and Potential Consequences For Your MCA Debt
Confession of judgement (COJ) is a toxic feature in many MCA agreements. If you fail to pay, the lender can file a judgement against you without a full court trial. This leads to:
- Immediate garnishments or account freezes.
- Damage to your credit (and possibly personal credit if you guaranteed the debt).
- Lawsuit escalation, especially if you’ve already been served default notices.
Why does it get worse if you’re using personal funds?
- Creditors see you as personally solvent. They’ll be more aggressive in seizing personal property if they believe you’re mixing finances.
- Notices of default could pile up.
Regardless of your business type—LLC, corporation, or sole proprietorship—there are repercussions.
Defense Strategy: How We’d Fight for You
Delancey Street is owned by an attorney, and we work closely with our sister-law firm on complex debt situations. If you used personal funds and are now facing threats from MCA lenders or other creditors, here’s how we defend you:
- Review All Agreements: Our business debt relief team conducts a very detailed analysis of your lending contracts, personal guarantees, and any COJ clauses. We find legal flaws, unfair terms, or predatory interest rates, which can be used to protect you in court.
- Negotiate Revised Terms: Because we have established relationships with many creditors and MCA lenders, we’re able to create a more manageable payment plan or partial forgiveness for some of your principal or the interest on your debt. If you already have used personal resources, we work to minimize further damage.
- Challenge Unfair Practices: If an MCA lender tries to enforce a COJ against your business, or bug you with aggressive collection tactics, we will use consumer protection statutes (where applicable) and other commercial codes that might be useful to your unique situation. We also reference guidelines from FTC.gov to challenge unfair practices.
- Protect Your Personal Assets: Our goal is to show that your personal finances are separate from the business.
We can help you navigate the entire business debt relief process. While paying business debt from personal funds might seem like a quick fix, it can create a legal headache—one we’re qualified to address and handle for you.
How It Could All Get Dismantled: A Stream of Consciousness
Imagine a scenario where you’ve drained personal savings to cover a toxic MCA:
- You thought it would be a straightforward solution.
- Suddenly, the creditor says you still owe late fees, interest, or default charges.
- You’re stuck wondering if your personal money went down the drain, because the debt ballooned beyond what you initially expected.
- A lawsuit or a COJ action hits.
- Now your personal and business financials are entangled.
- Creditors and courts question your LLC’s legitimacy, pointing to your personal funds as proof you “blurred” the lines.
One solution is to plan a debt negotiation defense well before that crisis hits.
Strategies to Avoid Personal Financial Traps
Delancey Street always recommends exploring safer alternatives first:
- Business Debt Settlement: Often, you can settle for less than you owe without sinking your personal accounts.
- Business Debt Consolidation Loan: Consolidate your high-interest obligations into one monthly payment, leaving your personal funds alone.
- SBA Loan Modification: Talk to the SBA directly (visit SBA.gov). Sometimes, they offer workout options that reduce or extend payments.
- Invoice Factoring: You can convert your outstanding invoices into immediate cash flow. This is a great way to unlock money you’ve got stuck with vendors.
- Communication with Creditors: Regardless of your situation, lenders usually want to get paid something. Work with us, and we’ll deal with your lenders and communicate everything with them.
These strategies let you safeguard personal resources while addressing debts in a structured way.
DELANCEY STREET IS HERE TO HELP YOU
We understand how difficult it is, when you’re up at night considering whether to empty your personal funds to save your business. You want to save your business, and the jobs of the people who work for you. At Delancey Street, we help you get an outcome that works for you. Before we settle your debt, we run each and every offer by you – in order to make sure it will actually work. We never want you to be in a situation where you feel like you’re going to fail.