Risk of bankruptcy as a general partnership: Protect your home

Questioner

Our painting company (VOF) is struggling. If it goes bankrupt, am I at risk of losing my house?

Questioner

That possibility is indeed present. In the event of bankruptcy, the trustee will investigate the general partnership's debts and the potential for generating revenue to pay them. If you are a partner in the painting business, the trustee can access your personal assets, as can your other partners.

Questioner

If you are married in community of property, your spouse also runs the risk that the trustee will liquidate her assets for the benefit of the creditors.

Questioner

When a general partnership (VOF) goes bankrupt, the partners are also declared bankrupt. Usually, there is a single trustee. If the VOF debts are listed, the bankruptcy can be settled. The remaining debts are then added to the partner's list of debts. Their bankruptcy is lifted when all debts can be paid or when everything has been liquidated. If the debts are high enough, the house is also sold. A prenuptial agreement is important in this regard, as this would protect the spouse's share. Even then, the house will be sold unless a deal is reached with the trustee.