What Can I Do About a $6,000 Loan and Taxes From a Business I Set Up for My Father in Texas?
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Reviewed & verified by A. Jason Velez, Esq.*
Managing Attorney, 1LAW · Last reviewed January 1, 2026
Legal Inquiry
Consumer Legal Issue
I opened a business less than a month ago for my father. I was pressured into setting it up in my name for him, and I now have a $6,000 loan and taxes that I am responsible for because he has stopped paying them. I don't know what to do.
Attorney Answer
Whoever's name is actually on the loan documents and the business's tax registration is generally who the lender and tax agencies will look to for payment, regardless of the informal understanding you had with your father. Sorting that out first will tell you exactly what you're dealing with.
Start by pulling together the actual paperwork: the loan agreement, any business formation documents, such as Texas Secretary of State filings if it was set up as an LLC or corporation, and whatever tax registrations exist with the IRS and the Texas Comptroller. If the loan is in your personal name, you're directly responsible to the lender no matter who was supposed to run the business day to day. The same goes for taxes tied to your Social Security number or an Employer Identification Number you applied for personally.
If you were genuinely pressured or coerced into signing, Texas contract law does recognize duress as a possible defense to enforcing an agreement, but it's a high bar. It generally requires an improper threat that left you with no reasonable alternative, not just family pressure or a difficult situation, so this is worth discussing honestly with an attorney rather than assuming it will excuse the debt.
Separately from what the lender or tax agencies can require of you, you may have your own claim against your father if he agreed, even informally, to cover these costs and then stopped. Texas law allows claims for breach of an oral agreement in some circumstances, and even without a clear agreement, there may be a claim for reimbursement based on him benefiting from a business you're now personally funding.
What to do next
1. Gather the loan documents, any business filings, and tax notices so you know exactly whose name is on what. 2. Contact the lender about a payment plan or hardship options before you fall behind, if you haven't already. 3. Contact the IRS and Texas Comptroller about payment plan options for any tax debt. 4. Talk to a Texas business or contract attorney about both your liability on the loan and any claim you may have against your father.
This is general legal information, not legal advice about your specific loan or business. A Texas attorney can review your documents and explain exactly what you owe and what options you have against your father.
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Frequently Asked Questions
Am I personally responsible for a business loan if the business was really my father's idea?
If the loan is in your name, yes, you're generally responsible to the lender regardless of any informal understanding about who would actually run or benefit from the business. That responsibility is based on whose signature is on the loan documents.
Can I get out of the loan by saying I was pressured into it?
Texas law recognizes duress as a possible defense, but it requires an improper threat that left you no reasonable choice, which is a high bar to prove. Talk to an attorney honestly about what actually happened before counting on this as a solution.
Can I make my father pay me back?
Possibly, especially if he agreed to cover these costs or has benefited from the business without paying his share. An attorney can review what was actually said or agreed and advise on whether you have a reimbursement claim against him.
