In most cases, an LLC protects your personal assets from business creditors. Usually, if you operate a compliant business, a court won’t order a corporate veil piercing, either. That said, if you offer one or more of your personal assets as collateral for a business loan, those assets can be taken. In some cases, seized collateral can contribute to personal bankruptcy.
An LLC can’t be used to bail yourself out of personal debts you incur, such as medical bills and personal income tax debt. If you have to pursue personal bankruptcy, you can also consider a Chapter 13 Bankruptcy, a wage earners’ plan bankruptcy. This version is not available for business entities.