[gnu6]

Even if it were changed to that, the story wouldn't end with "I couldn't buy food, my macbook pro got repossessed, and I went to federal pound-you-in-the-ass prison."

If you do get sued and your business collapses you can always start another one.

[analyst74]

Personal liability would be a nasty thing to deal with after your business failed. And you may not get to start another company with a huge personal debt.

[nknight]

I wouldn't sign a contract for personal liability on something that big, but bankruptcy law exists for a reason.

[vacri]

Didn't the US essentially nullify bankruptcy laws towards Bush's second term? As in, you can declare bankruptcy, but it doesn't clear your debts?

[nknight]

Uh, no. You're thinking of BAPCPA, which sucked, but was a far cry from what you're suggesting. Chapter 7 (straight liquidation) is harder but still very possible, especially if you've just been slapped with a multimillion-dollar verdict, while Chapter 13 (individual reorg) came out mostly intact, and 13 does result in discharges (but there are limits to the amount of debt you can have and qualify for 13).

BAPCPA: http://en.wikipedia.org/wiki/Bankruptcy_Abuse_Prevention_and...

Chapter 7: http://en.wikipedia.org/wiki/Chapter_7,_Title_11,_United_Sta...

Chapter 13: http://en.wikipedia.org/wiki/Chapter_13,_Title_11,_United_St...

[vacri]

Cheers, thanks for the info.

[gnu6]

It's so easy to incorporate it should always be done. I assume when someone starts working with that kind of money and has knowledgeable lawyers advising them that they'll be told to do that.

[nknight]

The point is that signing a contract for personal liability negates the incorporation.

[rprasad]

Incorporating without sufficient capital makes it almost trivial to "pierce the veil" of incorporation and go directly after the company's owners.

[gnu6]

That seems somewhat backward, because it would discourage those with limited assets from starting businesses and trying to improve their situation.

[chc]

The contract had a personal liability clause, apparently. Assuming those are enforceable, it seems like you're downplaying the downside.