Can You Transfer Personal Debt to Business? Complete Guide

Q: How does balance transfer work for credit cards?

Balance transfer is the process of transferring from one credit card to the other to pay off high interest debts with comparative ease. If you owe a high debt interest to a particular credit card company with a high interest rate, you can get a transfer of balance done to a credit card company that offers lower interest rates. This way you will pay more money towards the actual debt each month than just high interests.

Q: Do business credit cards affect personal credit?

Although it’s tried that your business credit is kept as far as possible from your consumer credit, it’s sort of impossible. This is because each business credit card needs a personal guarantee. So to some extent, if your business credit goes downhill, it will be affecting your consumer credit. If you\'re still confused, you can try contacting an independent charity such as StepChange or Payplan for further debt advice.

Scott

Janine

· Jan 12th, 2024

For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.

Are you a business owner with personal debts? You may wonder, ‘Can I transfer a personal loan to my business?’

You’re not alone! Each month, over 170,000 people visit our website seeking advice on debt solutions. We understand your worries about the impact on your business if personal debt is transferred over.

In this guide, we’ll cover:

The difference between personal and business debt
The process of transferring personal debt to an LLC
How to possibly write off some debt
Transferring your personal credit card to a business
Balance transfer on a personal loan

Our experienced team has dealt with similar debt situations. We know your concerns and aim to provide you with clear, helpful advice.

Let’s get started!

Can You Transfer Personal Debt to an LLC?

It’s not easy to transfer your consumer debt to an LLC. Even if you are able to do so, it’s also not the best idea.

If anyone would want to transfer their debt to their LLC, it would be an effort to dodge the debt.

And even if you transfer your debt, it will not only remain, but it will also increase through some fees, etc.

If you are looking to transfer your consumer debt just so you can ease down the process of payments, much won’t change again.

Is It a Good Idea?

Can You Transfer Personal Debt to Business — Source: MSE Forum.

If you are able to transfer your consumer debt to your LLC, it will not only become higher/larger due to some extra fees, tax, etc., but also won’t become any less of a burden.

Why? Because, even if you are transferring a debt off your consumer credit to some corporation, it will still be your responsibility.

You must also consider the potential tax implications. For example, interest on personal loans is not deductible in many cases, but business loan interest might be.

So, unless you have a solid reason for doing so, there’s no significant reason why you should transfer your consumer debts to your company debts.

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Can You Transfer Your Personal Credit Card to a Business?

Yes, you can transfer your consumer credit cards to company cards.

People might want to transfer their consumer credit to their business credit if they have used their consumer credit cards to make financial investments and funding for their, let’s say, new company.

However, in financial terms, there isn’t much that this transfer does for you – say, save you from debts, etc.

For instance, if you are transferring a bad credit history, dealing with it through your company credits won’t become easier.

The most it can do is help you keep better track of your new company’s financial history.

Similarly, if you are taking this step to protect your consumer credit from any financial mishap that your company might suffer, you will still be at minor harm.

This is because, for most credit card companies, a personal guarantee is an essential requirement when you apply for a loan from the company’s credit card.

I still advise that you always keep your company and consumer credit cards separate to keep better track of where your company is headed financially.

Also, because in the long term, its balance is beneficial in terms of lower interest rates in some cases, and no interest in rare cases.

FAQs

Can I sell consumer debt?

Yes, but it’s hard to get your way around it. Unless you have a previous written agreement, it will be hard to sell off your debt to a collection agency or so on, so it’s just an added struggle for you. Especially considering that there isn’t much benefit of doing so, you won’t be saving considerable money. I recommend that you negotiate with your creditor through other ways and new payment plans, unless they want you to sell your debt.

How does balance transfer work for credit cards?

Balance transfer is the process of transferring from one credit card to the other to pay off high interest debts with comparative ease. If you owe a high debt interest to a particular credit card company with a high interest rate, you can get a transfer of balance done to a credit card company that offers lower interest rates. This way you will pay more money towards the actual debt each month than just high interests.

Can a personal lawsuit affect my LLC?

All your personal financial matters are completely separate from your LLC. No creditors can claim your LLS for a personal debt or any lawsuit against you. However, since LLC is also an asset of yours, there might be a few legal complications and procedures that would include money collection through LLC. Because if you need to pay them an amount for any lawsuit, you need to bring the money from wherever you might have, even if that means taking a debt.

Does an LLC affect personal credit?

Your LLC cannot affect your consumer credit. However, a lot of times, a person’s consumer credit score ends up being affected by their business because they use their private financial resources to fund their business. But as far as LLC is concerned, the answer would be no.

Do business credit cards affect personal credit?

Although it’s tried that your business credit is kept as far as possible from your consumer credit, it’s sort of impossible. This is because each business credit card needs a personal guarantee. So to some extent, if your business credit goes downhill, it will be affecting your consumer credit. If you’re still confused, you can try contacting an independent charity such as StepChange or Payplan for further debt advice.