Determining your type of debt

Who is responsible for my business debt?

Sole trader debt

Do you run your own business?

If you do, you are personally responsible for all the debts of the business including tax. If your business is making a loss and you cannot afford to pay the debts then you should consider your personal insolvency options.

Partnership debt

Do you run a business along with one or more other people?

If you do, you are all equally responsible for the business debts including tax.

If the other partner(s) can’t be located, or cannot pay, then you will be considered responsible for all the debts. Talk to your partners. If the business is making a loss and you and the other partners cannot afford to pay the debts then you should consider your personal insolvency options.

Bankruptcy and partnerships

If one partner becomes bankrupt the partnership is automatically dissolved. Only the non-bankrupt partner(s) can continue to deal with the partnership assets and debts. The bankrupt person cannot continue to be involved.

If all partners become bankrupt the partnership is dissolved and all assets and debts of the partnership are dealt with by the Official Assignee.

Limited liability company (Ltd) debt

Is your company registered with the New Zealand Companies Office?

If it is then the company is responsible for the debts. However, if you have personally guaranteed the company debts you will be responsible if the company cannot pay.

If the company is making a loss, a receiver or liquidator may be appointed to deal with the company. You can be prosecuted or made responsible for the company debts if you continue to trade after the company becomes insolvent.