Personal Chapter 7 with Business Pers Guarantees

[catwhisperer]

Hi,
You all have helped ALOT! We have contacted an attorney to file chapter 7 for PERSONAL, still may do it Pro Se. We now have a bank breathing down our next for a business loan that is personally guaranteed. We are trying to avoid chapter 13 for the business but think we may be best to file both at the same time.

I think we should run away to Alaska and let them have it all! OK, so I won't. But
if you file Chapter 7 for personal and have a Subchapter S corp with amounts due that are personally guaranteed, anyone know how to handle that.

[Minnymouth]

Since the bank loan is personally guaranteed it may become a part of your personal BK......

All this you need to discuss with an attorney..... sticky situation....

[SinkingFast]

Also, as tough as some parts of the New BK Law are on personal filings, several folk have commented here that Business BK is even worse.

Several people, upon advise of their attnys, decided to let their businesses die a natural death, and then file personal BK.

That might be something you want to discuss with the attny when you meet. How Business BK works and how difficult filing Business BK may be.

[catwhisperer]

Also, as tough as some parts of the New BK Law are on personal filings, several folk have commented here that Business BK is even worse.

Several people, upon advise of their attnys, decided to let their businesses die a natural death, and then file personal BK.

That might be something you want to discuss with the attny when you meet. How Business BK works and how difficult filing Business BK may be.

Problem is that the bank is the ONLY problem - real long story. Otherwise the business is OK other than a few items we can definitely take care of. It would be a SIN to close the business because of the bank.

I've been reading and think that I may have leverage because the bank is going to want to get something instead of nothing so hopefully I can get them to accept payments.

Can I run away at least to Canada? Hmmmm.....

[kcj]

We had a business liability that was personally guaranteed. It was included in our chapter 7, thus relieving us personally from the obligation, but it did not relieve the business. Our company still had to pay the bill.

[catwhisperer]

We had a business liability that was personally guaranteed. It was included in our chapter 7, thus relieving us personally from the obligation, but it did not relieve the business. Our company still had to pay the bill.

I guess that is the question. If we file Chapter 7 personally and include the business bank loan on the bankruptcy, and do NOT file business bankruptcy, the bank cannot later go after us when the Chapter 7 is discharged, even years later?

[kcj]

That's how it worked for us. We got the bill discharged in our chapter 7, but we paid the bill through the business shortly thereafter.

Still pisses me off. Our lawyer told us not to pay it because it would be a preferential payment, he didn't fully understand that it was a legitimate business expense. Had we paid it before filing, it would have been fine, and we would have had that much less money in the business account. Since DH and I are the owners, the business net assets are considered our assets, so we basically had to buy the business back from the trustee. We could have saved a few thousand dollars by paying it before filing. Oh well.

[catwhisperer]

That's how it worked for us. We got the bill discharged in our chapter 7, but we paid the bill through the business shortly thereafter.

Still pisses me off. Our lawyer told us not to pay it because it would be a preferential payment, he didn't fully understand that it was a legitimate business expense. Had we paid it before filing, it would have been fine, and we would have had that much less money in the business account. Since DH and I are the owners, the business net assets are considered our assets, so we basically had to buy the business back from the trustee. We could have saved a few thousand dollars by paying it before filing. Oh well.

What? I'm confused. Were you a subchapter S or a sole proprietor? I think from what I found is that since the business is incorporated and we only get profits and losses passed through that we're OK. The business has no assets, only liabilities, and big ones. But, the liabilities we are paying OK, the business is paying them OK, just not paying us any salary because we aren't making enough. So, if the business was checked it would not appear that we are hiding assets or money there - cuz it ain't there! If it was, boy would I avoid bankruptcy.

[kcj]

We were a C corp at the time. But had we paid out the $$ for that bill when we were paying off other business expenses, the company would have looked a little less inviting and I think the trustee would have left it alone. Instead, we have to pay him the net value at the time of filing. We definitely weren't hiding and money, but he wants what we did have just the same. (Assets - Liabilities = Equity. We have to pay him the equity amount)

[no_it_all]

If your Subchapter S didn't pay you a salary, has no assests and only liabilities it sounds a lot like a tax shelter. Not sure if that is important or not. In addition, if the Subchapter S couldn't pay a salary, how about getting a judgement against if for all the work you did and weren't compensated for? Who knows, maybe the S corp will flourish one day? If you did have a Subchapter S could you put it in your IRA and therefore keep it exempt from creditors?? Just kicking around ideas that probably are not even relevant........