How you deal with business debt depends largely on the legal structure of your business. You might run your business as a Sole Trader, in Partnership with your spouse or someone else or you may have a Company and maybe even a Trust.
Quite often there will also be personal debt (Credit Cards/Personal Loans) which have been incurred when the business wasn’t able to meet all business and costs.
There are lots of reasons why you might get to a stage where debt levels become unmanageable. Business activity downturn, accident or illness, loss of contracts, unexpected tax or relationship breakdown to name a few.
Whatever the reason there are many ways to deal with this debt.
For Tradies or Professionals who operate alone the situation is relatively clear. The debts are all in your name so you are solely liable to pay them back.
What is not clear is if your assets (Houses, Cars etc.) are in joint names then your spouse or joint owner may be involved if creditors try to enforce sale of these assets.
Most small business partnerships are between husband & wife and therefore the debts are usually incurred jointly.
Assets are more at risk because creditors have no other party to consider when trying to enforce sale of assets.
Company debts are owed by the company not individuals. However in most small businesses the Directors of the Company are required to give Directors Guarantees to main suppliers & landlords, so each Director who signs becomes personally liable as well.