What happens to a person whose business goes bankrupt?

Business bankruptcy question: a Quora user asks: What happens to a person whose business goes bankrupt?

Victor Fong, Licensed Insolvency Trustee in Toronto, Canada replies:

In Canada, if you are incorporated, then you are not responsible for the corporation’s debts. There are however 2 major exceptions:

1. If you are a director, you are personally responsible for unpaid wages & vacation pay, unremitted payroll taxes and unremitted sales taxes that were left unpaid from the distribution of the corporate assets (if any) by the bankruptcy trustee.

2. If you signed any personal guarantees for the corporation, you will be personally liable if these debts remain unpaid from the corporate bankruptcy proceedings.

More often than not, the business was also the owner’s sole source of income. So the business owner has most likely accumulated a lot of personal debt to finance his living expenses because he wasn’t earning enough money from the business. So in my experience, the business owner will usually file for personal bankruptcy alongside the bankruptcy of his business corporation.