Can my company buy my personal debt?
When your debt is forgiven, you have to consider the amount written off as an ordinary income item (with the exclusion of the debt originated from the purchase of primary home). If you're trying to write the debt off from your taxes - then it won't work. Even if you can expense the debt forgiveness, you will incur tax liability on your personal taxes side, and in addition you'll be out of cash in your business. So basically you'll end up paying it with after tax money, exactly the thing you're trying to avoid. In addition, you're dealing with related persons here, which means that the loss deduction might not be allowed (depends on the actual details of the transaction), so you might actually end up paying more taxes with this scheme that just paying off the loan directly (if your business pays taxes separately from your person). A loss on the sale or exchange of property between related persons is   not deductible. This applies to both direct and indirect transactions,   but not to distributions of property from a corporation in a complete   liquidation. For the list of related persons, see Related persons   next.
From Wikipedia: If a company with limited liability is sued, then the claimants are   suing the company, not its owners or investors. A shareholder in a   limited company is not personally liable for any of the debts of the   company, other than for the value of their investment in that company. Summarized, no, if you buy stock from the regular stock market like NYSE, you're not personally liable for any debt or fraud that happens. I can't say if there is anything specific that makes lending illegal, but if your company goes bankrupt, you might end up in trouble.  First, it's a loan. It must be repaid. It must be in the books as a loan, and if your company couldn't pay its bills, you would have to ask for the money back. If the company goes bankrupt, your creditors will ask for the loan to be repaid.  Now if things are worse, your company goes bankrupt, and the person cannot pay back the money, then you could get into real trouble. Creditors won't like that situation at all. They will claim that you moved that money aside to protect it from creditors. They might be able to force you personally to pay, or even start criminal charges against you if you can't pay either.  In the UK (and probably elsewhere) it's criminal for the company to pay dividends if that means it cannot fulfil its financial obligations. If there is no money left because of that loan, then you can't get dividend payments from your company.  So as long as your company's finances are fine, and that person's finances are fine, you will be Ok (except I don't know if you would need a license), but if there are financial problems then being an LLC might not protect you. "is your credit history ruined, or merely dinged? Is the blow   recoverable? Any bad credit rating event is recoverable given enough time / money to solve the problem.  As far as ""Ruined"" vs"" ""Dinged"", well, that's a matter of opinion; some people think that one bad item is the end of the world, others not so much.  You will have an unpaid debt listed on your report.  This will drop your score.  The amount it impacts the score will depend on other factors in your report. Can the carrier try to get the money back in court? I assume you'll   wind up dealing with a debt collector.  Yes they could go to court, but that's unlikely at least in the short term.  Far more likely is that the debt ends up sold to a debt collection agency for pennies on the dollar.  The debt collection agency will harass you until you pay and they might file in court if they think the debt is more than enough to cover the court costs. Will this affect any other relationships you have? Possibly.  A bad rating may make it more difficult to get credit in the future.  However that depends on numerous other factors such as your entire history.  It could even prevent you from being hired from certain jobs - not many of them, but some.   Is it criminal? Read this: http://www.startribune.com/investigators/95692619.html  The US does NOT have a debtors prison.  However if the company decides to file a court case and you fail to appear or fail to abide by the court ruling then, in some states, you could be committing a crime and may be thrown in jail.  At which point you are on the hook not just for the original fee but potentially a plethora of other costs.  Never mind the loss of reputation when your friends, family and coworkers find out that you are sitting in jail. At the end of the day, just pay the debt.  If you agreed to the plan and the plan has an early cancellation fee then the moral and ethical thing to do is pay it.  Trying to see how bad it would be to ignore it isn't the right way to live." one should run their personal business like a company.  I walked away from major credit card debt three years ago.  soon the debt will be effectively gone forever, I having paid nothing.   Fuckers should have negotiated. eat shit big banks. "I have never double-answered till now.  This loan can't be taken out of context. By the way, how much is it? What rate? ""Debt bad."" Really? Line the debt up. This is the highest debt you have. But, you work for a company that offers a generous match, i.e. the match to your 401(k). Now, it's a choice, pay off 6% debt or deposit that money to get an immediate 100% return.  Your question has validity. In the end, we can tell you when to pay off the debt. After - The issue is that you are quoting a third party without having the discussion or ever being privy to it. In court, this is called 'hearsay.' The best we can do is offer both sides of the issue and priority for the payments. Welcome to Money.SE, nice first question." You can avoid companies that might go bankrupt by not buying the stock of companies with debt. Every quarter, a public company must file financials with the EDGAR system called a 10-Q. This filing includes unaudited financial statements and provides a continuing view of the company's financial position during the year. Any debt the company has acquired will appear on this filing and their annual report. If servicing the debt is costing the company a substantial fraction of their income, then the company is a bankruptcy risk. Strange that they're holding you personally legally liable rather than the company. That's normally a big part of the corporate veil. You need a lawyer, not a stackexchange. Generally these are public companies set up to do some particular thing and get revenue from use.  And yes, the elected representatives signed the municpalities on to these things.   If you co-sign a loan, sooner or later you may have to pay up. I am not a lawyer.  I do however own an LLC. It's setup as a partnership with 50/50 ownership.  You can do it as a sole proprietorship.    In basic terms, if you separate your money and assets from the money and assets of the company then you are personally immune from lawsuit and thus your personal assets are safe.  You have to set it up right (fairly cheap) and keep the records right (ie never mix personal and company assets ) but it provides a nice legal buffer and in some cases tax benefits.    Do not construe this as legal or accountanting advice.  Speak with pros to understand and get it set up right.  But it's worth it. "According to an article on Bankrate.com from 2011, yes, it can hurt your credit: With individual liability accounts, the employee holds all responsibility for the charges, even if the company pays the issuer directly. Joint liability means the company and employee share the responsibility for payments, says Mahendra Gupta, author of the RPMG survey. In both cases, if the card isn't paid and the account becomes delinquent, it will pop up on the employee's credit report and dent his or her credit score, says Barry Paperno, consumer affairs manager at myFICO.com. It doesn't matter if the company was supposed to make the payment; the repercussions fall on the employee. ""It will impact your score no differently than if you were late on one of your own accounts,"" Paperno says. Usually, with corporate credit cards, the employee is liable along with the employer for charges on the card.  The intent is to provide the employee with an incentive not to misuse the card.  However, this can be a problem if your company is late in paying bills. In the distant past, I had a corporate credit card.  I was not supposed to have to pay the bill, but I did receive a bill in the mail every month.  And occasionally, the payment was late.  In my case, these late payments never showed up on my credit report.  I can't remember now whether or not this card was reported on my credit report at all.  And I remember being told when I got the card that I was jointly responsible for the card with the company. However, your experience may be different.  Do the on-time payments show up on your credit report?  If so, that may be an indication that a late payment might appear." Yes this would be the same as when a corporation sells bonds. If it is the same as you describe. A product page would make it possible to give you a definitive answer. Also I strongly advice against taking out this type of loan if not for investment "I believe no-one who's in a legal line of business would tell you to default voluntarily on your obligations. Once you get an offer that's too good to be true, and for which you have to do something that is either illegal or very damaging to you - it is probably a scam. Also, if someone requires you to send any money without a prior written agreement - its probably a scam as well, especially in such a delicate matter as finances. Your friend now should also be worried about identity theft as he voluntary gave tons of personal information to these people. Bottom line - if it walks like a duck, talks like a duck and looks like a duck, it is probably a duck. Your friend had all the warning signs other than a huge neon light saying ""Scam"" pointing at these people, and he still went through it. For real debt consolidation companies, research well: online reviews, BBB ratings and reviews, time in business, etc. If you can't find any - don't deal with them. Also, if you get promises for debtors to out of the blue give up on some of their money - its a sign of a scam. Why would debtors reduce the debt by 60%? He's paying, he can pay, he is not on the way to bankruptcy (or is he?)? Why did he do it to begin with?" To issue corporate grade bonds the approval process very nearly matches that for issuing corporate equity. You must register with the sec, and then generally there is a initial debt offering similar to an IPO. (I say similar in terms of the process itself, but the actual sale of bonds is nothing like that for equities). It would be rare for a partnership to be that large as to issue debt in the form of bonds (although there are some that are pretty big), but I suppose it is possible as long as they want to file with the sec.   Beyond that a business could privately place bonds with a large investor but there is still registration requirements with the sec.  All that being said, it is also pretty rare for public bonds to be issued by a company that doesn't already have public equity. And the amounts we are talking about here are huge. The most common trade in corporate debt is a round lot of 100,000. So this isn't something a small corporation would have access to or have a need for. Generally financing for a smaller business comes from a bank. Almost every company I know of charges something like 2% per month on past due accounts.  They are not financial institutions, so it's probably quite legal. Typically you give a loan to the company from yourself as a private person, and when the company makes money the company pays it back to you. Then the company pays for all the expenses with the money from the loan.  Even if you don't want a business account yet, you can probably ask your bank for a second account (mine in the UK did that without any problems).