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Small business and personal CC debt

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  • Small business and personal CC debt

    I have a small s-corp which doesn't look like surviving anymore. All said and done, I will be left with 100k in business debt with personal quarantee, 50k of CC debt and without income. No assets, put everything into the business.

    Don't know what to do. Where do I start?

  • #2
    Are you wrapping up the business now (liquidating)?

    Does the business have inventory or is it more of a service type business?

    Is this your sole income? In other words, is the household income only the income from the business?

    A S corp is considered an asset of yours. So you can file a Ch 7 personally to discharge the personal guarantees for your business and your personal debt. If you have more than 50% of your debt is business rather than personal, you do not have to take the means test. It is important to get a good, experienced BK attorney that is familiar with the small business aspect of filing. Look at this link for struggling businesses: http://www.moranlaw.net/struggling.htm

    Which state are you located in? Check here for exemptions: www.legalconsumer.com

    The best place to start is here! You can research your options, then have enough knowledge to interview several attorney's. This is not the time to hire the least expensive attorney. It is the time to hire the most knowlegdeable attorney that is familiar with Ch 7's and small businesses. It is not always necessary for you to have a business filing. In fact, many people file personal Ch 7 and then just close the corporation. Read thru the first link to get an idea of what to do.
    Filed CH 7 9/30/2008
    Discharged Jan 5, 2009! Closed Jan 18, 2009

    I am not an attorney. None of my advice is legal advice in any way..

    Comment


    • #3
      Thank you, I have read through the links and am trying to understand this a bit better.

      We are in a service business and our only household income was from the business. We are looking at liquidating the business and the assets are not much. They wouldn't cover for anything. Over 50% of the debt is business loan and the rest is credit card debt. The majority of which again is on business card.

      I am just trying to understand how we can file a personal Ch-7 and close the business. The bank loan officers would call us rightaway if we miss a payment. Our loan is with a local bank. Should we keep paying the bank loan instalments until we file?

      I was just reading the C-corp thread. I am thinking we are a S-corp and have left a message with our accountant. I owe him money, don't know if he'll return my call soon. What if he had registered us as a C-corp? Would our filing status change?

      Comment


      • #4
        We are in a similar situation and met with our banker yesterday. We have never been late with our loan payment but we know it is time to surrender and file bk. Our banker needs a broom to make her personality complete. We surprised her by having our lawyer with us (I think we have an awesome lawyer at this point). We are stressed enough without her BS. Anyway, we will be liquidating by contacting some of our competitors and what we don't sell in the next week or two will go to an auction. Odds are pretty good that you are a S Corp if you are a sole owner. Your debts will be discharged in the bk filing. I am guessing we have about $100k in secured debts (SBA loan) and another $150k in unsecured debt. The liquidation of assets will be applied to the secured debts and whatever is left will be discharged in bk along with the unsecured debt.

        Comment


        • #5
          Having been the idiot that started the C Corp thread, I'll fill you all in on what's going on with me here......

          I am hoping to retain the business (at least in the short term) and feel relatively confident about that due to the circumstances surrounding the company (lots of tax debt - which I can't discharge, and the company's largest asset is a loan to me - which will be discharged). There's no value there for the trustee to take. Even if the hard assets were liquidated, it wouldn't be enough to cover the tax bill. My client list is useless to anyone but me (trustee can't take my brain, can he?), so I don't see an opportunity to generate revenue there.

          Toward that end, even though I have listed all of my personal guarantees in the BK, the corporation has basically struck deals with all the creditors in that list - either reworking payment schedules, or settling the debt for less than what it owed. They are all, for the moment, as happy as pigs in a wallow.

          The main driving factor behind my BK was a severe drop in revenue that * ahem* severly curtailed my ability to pay myself a salary that would allow me to continue paying the CC's. However, it can still pay me enough to make the mortgage payment, keep the lights on and the water running, and put food on the table.

          If I can manage to turn the business around - great. If I can't (after the stress of dealing with the debt is gone), then at least I can shut the company down gracefully - and do right by my clients, and perhaps do right by the company's creditors as well (most of which have been tremendously supportive during this time).

          I do realize that my situation is a bit different than most of the small biz owners on here.....but, I did find virutally all of my corporate creditors MUCH more willing to work with me than my private ones (the exception being American Express, and as far as I'm concerned - they can go pound sand). My suppliers have been great - and even my bank credit line has been wonderful to deal with (even after filing).

          I am considering myself lucky at this point. Now, there's always the chance that the trustee will see things differently (you should have seen the box of paper he asked for - my poor copy machine was belching fumes), but my attorney is pretty confident that it will work out allright in the end.

          If it doesn't - well, then we'll re-group and figure out what the next phase is.
          Moving ahead with my fresh start!
          Ch 7 Discharge: 12/14/2009
          TT Report of No Dist! 03/31/2010
          Case CLOSED!!!: 04/28/2010

          Comment


          • #6
            You need to meet with your accountant and a bank business manager so you may a more a clear idea of exactly what to do next, and what are the proper steps to take to move forth.

            I wish you the best of luck!
            Unsecured Business Loans
            Business Cash Advance
            http://orbitbusinessloans.com

            Comment


            • #7
              Originally posted by Jenna555 View Post
              You need to meet with your accountant and a bank business manager so you may a more a clear idea of exactly what to do next, and what are the proper steps to take to move forth.

              I wish you the best of luck!
              You need to get a life and quit trying to sell something with that signature.
              All information contained in this post is for informational and amusement purposes only.
              Bankruptcy is a process, not an event.......

              Comment


              • #8
                Originally posted by JThorn View Post
                Thank you, I have read through the links and am trying to understand this a bit better.

                We are in a service business and our only household income was from the business. We are looking at liquidating the business and the assets are not much.
                You need to be careful "liquidating" anything. Nothing, absolutely nothing that your business owns is exempt. If you are going to sell anything, you must get a fair market price for it. Then, you're going to need to be able to account for the money. If you are now insolvent, then you are the defacto trustee for the corporation. Anything you do that is detrimental to the companies creditors is on you. Think about that one!

                Originally posted by JThorn View Post
                They wouldn't cover for anything. Over 50% of the debt is business loan and the rest is credit card debt. The majority of which again is on business card.

                I am just trying to understand how we can file a personal Ch-7 and close the business.
                You can file a personal 7 and make your personal responsibility go away. However, with that being said, the business still owns the debt and that debt could turn into phantom debt that haunts you forever.

                Originally posted by JThorn View Post
                The bank loan officers would call us rightaway if we miss a payment. Our loan is with a local bank. Should we keep paying the bank loan instalments until we file?
                If you haven't figured this out yet, you're soon going to.

                THE BANKER IS NOT YOUR FRIEND

                He is your banker.

                If you can't pay, then you can't pay. Don't worry about it. You're going find out soon enough that they don't give a rats a$$ about you.

                Originally posted by JThorn View Post

                I was just reading the C-corp thread. I am thinking we are a S-corp and have left a message with our accountant. I owe him money, don't know if he'll return my call soon. What if he had registered us as a C-corp? Would our filing status change?
                So now, you're going to change to a C-Corp and for what purpose? You owe your accountant money? How about your taxes, have you paid them? They don't go away.

                For your sheer amusement, here's my advice.

                Forget about the banks. Forget about the credit cards. Make sure your taxes are paid, and your bk attorney gets paid.

                BK 7 personally, and do the S-Corp too. You can start up another one for very little. Get this off your back and start over fresh.
                All information contained in this post is for informational and amusement purposes only.
                Bankruptcy is a process, not an event.......

                Comment


                • #9
                  I aggree with "frogger" with one exception, you do not need to file BK on a corporation only a personal BK. A business can not receive a discharge so why file. PAY ANY OUTSTANDING TAXES!

                  Comment


                  • #10
                    Originally posted by myid4u2c View Post
                    I aggree with "frogger" with one exception, you do not need to file BK on a corporation only a personal BK. A business can not receive a discharge so why file. PAY ANY OUTSTANDING TAXES!
                    Ditto
                    Filed CH 7 9/30/2008
                    Discharged Jan 5, 2009! Closed Jan 18, 2009

                    I am not an attorney. None of my advice is legal advice in any way..

                    Comment

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