Cofounders should be paid if the company has received external investment already. Employees should be paid even if the company is not making money.

Looks like OP is very young, all he and his cofound concerned is about the product and market, etc., not including how to run a business. In business, cash flow is always the no. 1 concern. If there is not enough fund, don't hire, no lease. Based on my previous job experience, $1M cannot afford a team in office. $3M can only have 1 years expense. Startup's burn rate is super high. Founders need to have plan B in place. It is said, "Failed to plan is plan to fail".

Emotionally, it's hard to accept the pitfall from owing $1m to negative. But how about if you never had that $1m, was that going to feel better? It's all about expectation and planning.

So the most important thing is to learn what can be avoided from this lesson. A lot of people are helping him to get rid of fear on the emotional side. It's sad that I didn't see much help on the business side to help other failed companies as well. Emotion is temporarily. Closing out process is a must to go. But how to prevent the 90% of the failed companies to avoid the pain is more important.

A lot of people care about it, but I didn't see any experts helping outside the YC meetings, although here is YC extension forum.