Business debt transfer out of my name?

[Bizbad]

Hello,
I recently contacted a company that claims to specialize in transferring business debt out of the name of the owner and into the business solely. Has anyone heard of this before? My business is in trouble, and I am trying to find a way to protect my family and my assets. If this does not work it is probably CH. 13 for me.

[HHM]

Probably a scam....the old adage is mostly true...if it sounds to good to be true, it probably is.

There really is only a couple ways to get out of debt.

1. Pay it
2. file BK

Within the pay it category you have.
a. pay it in full
b. negotiate a settlement.

[AngelinaCat]

Hi Bizbad: Welcome to the BK Forum. You will find a lot of help and moral support here.

While I have no direct experience in what you are asking, I do suggest being careful about any company that *claims* to do whatever they claim to do. You know the ald saying: "If it sounds too good to be true....."

There are other businesspeople who are members of this board that can relate their experiences.

I suggest reading through the FAQs and the 'Stickys' that are posted at the top of each individual forum. Have you talked to a bk attorney at all?

We will also need to know if your business is incorporated in any way? Perhaps an LLC, or a SoleProp?

Thanks, and good luck on your journey.

[HHM]

Well, let me back up...

There is one way to get it out of your name. I think what the company is probably suggesting this...

1. Create a 2nd corp.
2. Apply for credit under that 2nd corps name (i.e. credit cards)
3. Make sure there is no personal guarantee (good luck, not likely to happen).
4. And than pay off your personally guaranteed debt on corp 1, with the credit cards from corp 2.

Here are the pitfalls
1. The plan assumes you can get credit solely in the name of corp 2 without a personal guarantee. (not likely)
2. If you don't make payments on the transferred debt, you could be looking at fraud.
3. The plan outlined is really more about "credit reporting" than actual debt management. Business credit cards, even if personally guaranteed, are typically NOT reported on your credit report. So, when the company claims to "take the debt out of your name", they don't really mean in the "legal" sense, i.e. your obligation to pay, the debt simply comes off your credit report so you don't show a bunch of high balances, but you are still obligated to PAY the debt.

However, the company you saw who is pitching the, get debt out of your name, is probably a scam.

[Bizbad]

Thanks for the input guys. I am a Sole Member LLC. I think you are right HHM about the way they go about this. My question is....if they can get credit for the biz without a personal guarantee, will I still be personally liable if the biz fails? I think the company is a scam, or at least they are charging a high price for a simple job. It does make some sense though, if they can get creditors to lend the biz money without a guarantee. What do you think?

[HHM]

The problem is, your looking for a way to get out of your personal responsibility to pay the debt and let the debt die with the corp., that is fraud...so let's be clear about that.

Business creditors tend to be more aggressive and because it is business debt, you won't have the same consumer protections when the creditors try to sue you personally and pierce the corp. veil. And the fact that you are sole member LLC puts you in some murky legal waters regarding whether the courts would even recognize the separate corp. entity.

But before we go further, how much money are we talking about?

[Bizbad]

It's about 75k. I am hoping to not have to file at all. There is a fair chance that this will work out and I won't have to file at all. I just want to protect myself in case of the worst. I am not a bad or dishonest person. I would much rather pay my debt than any other outcome. Problem is, the business I am in is foodservice. My food costs have skyrocketed, and I do not have price control in my cafeteria. Long story, point is, if I run out of options I want to have the best route laid out. None of this debt would be me buying big screen TV's or cruises. Simply a business that did not work.