Borrowing money to help you open your business can be risky. If your business doesn't make enough to pay back its debts, your creditors can take action against the business and, in some cases, against you personally. You and your business may have to file for bankruptcy to end the financial stress due to your business debts. In Missouri, the statute of limitations on either business or personal debt is five to 10 years, depending on the type of loan.
Type of Debt
As of 2011, Missouri's statute of limitation on debts depends on the type of debt the business incurs. All credit card accounts, whether business or personal credit, have a statute of limitations of five years, while any debts involving contracts such as business loans have a statute of limitations of 10 years. If a creditor sues your business and wins, the statute of limitations for collecting a judgment is 10 years from the date of judgment.
Meaning
The statute of limitations refers to how long a creditor has to collect a debt using the legal system after the debtor --- in this case, a business --- defaults on the debt. The statute of limitations refers only to court actions. Creditors are still free to contact the debtor by mail or telephone or give a debt collection agency the power to do so even if the Missouri statute of limitations has expired on the debt.
Bankruptcy and Debt Collection
If a business is unable to pay its debts, one way to stop debt collectors from hounding business people is to file for Chapter 11 bankruptcy. Chapter 11 allows businesses to liquidate assets or set up a structured repayment plan to repay creditors. In Missouri, if a business files for Chapter 11 bankruptcy, debt collectors may not continue to take collection action against the business while the bankruptcy is being settled.
Warning
If your business cannot pay its debts, Missouri creditors may hold you personally responsible. The federal and state government consider business owners personally liable for nonpayment of payroll taxes and can take collection action against you individually as well as against your business. The statutes of limitations for personal debts are the same in Missouri as for business debts; your creditors can sue you personally as long as they stay within the Missouri statutes of limitation for debts.
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