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When a lender or vendor sues over a business debt and your own name appears on the complaint next to the company’s, the case is no longer only about the business. Your options depend on one question: why are you personally on the caption? The answer decides which defenses you have, which of your assets are at risk, and how the case can end for you.
This guide is written for the owner who has been named individually. If only the company was sued, start with our guide to what defendants can still control after being sued for an unpaid business debt.
Why Would a Creditor Sue Me Personally for a Business Debt?
Usually because you signed something that made the debt yours, most often a personal guaranty. Owning the company does not, by itself, make you liable for what it owes. Under section 605.0304, Florida Statutes, an LLC member is not personally liable for the company’s debts “solely by reason of being or acting as a member or manager.”
That shield has limits, and creditors plead around it in a few common ways:
- A personal guaranty. You promised to pay if the company does not.
- The way you signed. A contract signed in a way that binds you individually, not only the company. We explain why the body of a contract can trump the signature line.
- Veil piercing. An allegation that the company was used to mislead creditors. Our post on piercing the corporate veil in Florida explains why that is easier alleged than proven.
For the broader picture, including whether you need a lawyer separate from the company’s, read what it means when executives or managers are named in a lawsuit.
Do I Have to Respond if I Think I’m Not Personally Liable?
Yes. You are a separate defendant, and a response filed only for the company does not protect you. If you do not respond on time, the creditor can seek a default against you personally, even on a claim you could have beaten. In Florida state court, a defendant generally has 20 days after service to respond. Federal court deadlines differ.
Our article on what happens if you miss the deadline to respond to a lawsuit covers the consequences and the limited ways back.
What Defenses Can a Personal Guarantor Raise?
A guaranty is a contract, so your defenses start with its exact words. Pull the signed guaranty before you decide anything, because the answer to most guarantor questions is in that document. Some guaranties cover one loan; others cover every present and future obligation of the company.
Questions worth asking about yours:
- Did you sign it personally? Signing with your title on the company’s behalf is different from signing as an individual.
- Does it cover this debt? Check the debt described, any dollar cap, and whether the obligation sued on falls inside it.
- Did you revoke it the way it requires? Resigning or selling your interest may not end a guaranty that sets its own termination procedure.
- Were you induced to sign by false statements?
- Is the amount right? Check how interest, fees, and credits were calculated. See our guide to defending a collection lawsuit when the amount claimed is wrong.
Florida courts have ruled on signing capacity, revocation, and fraudulent inducement in guaranty cases, with results that turn on the facts and the guaranty’s language. Our series on successful defenses to enforcement of a personal guaranty and defenses that have failed walks through the case law. If you never signed at all, see liability for forged personal guaranties in Florida.
Which of My Personal Assets Does Florida Law Protect?
Even if a judgment is entered against you, Florida exempts several categories of personal property from collection. Knowing your exemptions early tells you what is truly at risk and shapes what a fair settlement looks like. Our personal guarantors and statutory creditor exemptions pages cover the planning side.
Your Homestead
The Florida Constitution protects a natural person’s homestead from forced sale, subject to exceptions such as taxes and debts to buy, improve, or repair the property. The protection is limited to one-half acre inside a municipality and 160 acres outside one. Our overview of Florida’s homestead exemption explains the requirements.
Property You Own With Your Spouse
If only you signed the guaranty, property you and your spouse own as tenants by the entireties is generally out of the creditor’s reach. In Beal Bank, SSB v. Almand & Associates, the Florida Supreme Court held that “only the creditors of both the husband and wife, jointly, may attach the tenancy by the entireties property.” It also held that a bank account titled in both spouses’ names is presumed to be held that way if the signature card does not expressly disclaim it, which puts the burden on the creditor to prove otherwise.
That protection does not stop questions about those assets. Creditors may still be able to take discovery about assets you hold jointly with a spouse.
Your Wages
Under section 222.11, Florida Statutes, a head of family’s disposable earnings of $750 a week or less are fully exempt from garnishment. Earnings above $750 a week cannot be garnished unless the head of family signed a written waiver that meets the statute’s strict form requirements, so check whether your guaranty or loan papers contain one. A head of family is someone providing more than half the support for a child or other dependent. See our post on the head of household wage garnishment exemption.
Your Retirement Accounts
Florida law generally exempts qualified retirement accounts, such as 401(k)s and IRAs, from creditors’ claims, with narrow exceptions such as certain claims by a former or surviving spouse. Our retirement protection planning page describes how those protections work.
Should I Move Assets Out of My Name Now?
Not without advice first. Moving assets after you have been sued can create a second lawsuit and make the first one harder to settle. A transfer made after you were sued can be treated as evidence that you meant to hinder, delay, or defraud the creditor.
Under section 726.105, Florida Statutes, one factor a court may consider is whether, before the transfer, “the debtor had been sued or threatened with suit.”
Talk to counsel about avoiding fraudulent transfers before you retitle property, pay off relatives, or move money between accounts. Our article on how to protect your business when facing a civil lawsuit explains which moves are still available.
Does a Company Bankruptcy Stop the Lawsuit Against Me?
Generally, no. The automatic stay under 11 U.S.C. section 362 bars actions “against the debtor,” and when the company files, the company is the debtor. A company bankruptcy can pause the case against the business while the claim against you as guarantor moves forward.
In unusual circumstances, a bankruptcy court may extend protection to a guarantor, but that is the exception, not the rule.
The same is true at the end of the case. A discharge of the company’s debt does not, by itself, release a guarantor. Whether a personal filing makes sense is a separate decision with its own costs, and our bankruptcy and restructuring team can walk through it with you.
Can I Settle My Personal Exposure Separately?
It may be possible. A creditor holding both a company claim and a guaranty may be willing to resolve your exposure even while the company’s account is still open. Whatever you sign, confirm that the release names you individually and covers the guaranty, because a release protects only the people and claims it describes.
Your exemptions matter here. A creditor that understands how much of your property is protected may value the guaranty claim differently. Payment timing and default terms matter too, as we explain in business debt settlement strategies that protect cash flow.
How Jimerson Birr Helps Owners Sued Over Business Debt
Our lawsuit defense attorneys can review a collection or guaranty lawsuit filed against you individually. We start with the documents you signed, the deadline you face, and the assets Florida law already protects. From there, we can help you decide whether to fight the guaranty, negotiate your own release, or both.