top Ad Widget

Collapse

Announcement

Collapse
No announcement yet.

What happens if I can't afford to fight AP?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    What happens if I can't afford to fight AP?

    We have an LLC where wher many investors invested money to help growth of the business. Due to the bad economy, the LLC is now worthless. We were recently sued personally by one of the investors.

    We filed Chapter 7 and listed all of the business investors who invested in the LLC as "potential business creditors" on the advise of our BK attorney. This way they won't be able to sue us personally for the LLC debts. We've already had our 341 meeting. Now the some of the investors are still upset that we filed personal Chapter 7 so they've threatened contesting the chapter 7.

    My question is what happens if we just don't have the money to fight the AP? Can we represent ourselves? Can they really prevent personal debts from being discharged? Hope this question made sense.

    #2
    All of your creditors have the opportunity to contest the discharge of their debt (11 USC 523) or even your right to a discharge of any debt (11 USC 727). Will any actually file something even though they are threatening to do so - only time will tell. Many times, especially in situations like yours, the ticked off investor is just venting and never follows through. Regardless, they have until 60 days after your 341 to file something. If they miss that deadline you are done with them.

    If an AP is filed you can:

    1. Represent yourself - usually not a good idea.
    2. Hire an attny to fight the AP or even try to settle it.
    3. Do nothing and let it go to a default judgment - not a good idea unless you know you can "protect" your future assets. Even a worse idea if part of the AP includes a claim under 11 USC 727 as such a default would mean that NONE of the debt listed in the bk would be discharged.

    For now there is nothing to do. Remember, the creditor must timely file the AP.

    Des.

    Comment


      #3
      In other words, don't worry unless/until someone files an AP. Talk is cheap.....
      All information contained in this post is for informational and amusement purposes only.
      Bankruptcy is a process, not an event.......

      Comment


        #4
        Originally posted by despritfreya View Post

        If an AP is filed you can:

        1. Represent yourself - usually not a good idea.
        2. Hire an attny to fight the AP or even try to settle it.
        3. Do nothing and let it go to a default judgment - not a good idea unless you know you can "protect" your future assets. Even a worse idea if part of the AP includes a claim under 11 USC 727 as such a default would mean that NONE of the debt listed in the bk would be discharged.

        For now there is nothing to do. Remember, the creditor must timely file the AP.

        Des.
        Thank you so much for the response! I do realize I may be worrying for no reason. However I'd like to mentally prepare ahead of time and strategize so we're not caught unprepared.

        I'm curious...what good would could result from creditor filing an AP with a claim 11 USC 727? I would think that as a creditor, if I could just prevent my debt from being discharged while allowing other debts to be discharged, that would just leave more disposable income for the debtors. Is my reasoning off base?

        It would seem odd that investors would even care if we filed personal BK when our personal debts had nothing to do with the business. They could still potentially come after the business right?

        Comment


          #5
          Originally posted by frogger View Post
          In other words, don't worry unless/until someone files an AP. Talk is cheap.....
          I understand... I just Hope these investors will come to their senses as we still want to perform our obligation to them if and when we can salvage the business.

          Comment


            #6
            Originally posted by Konallc View Post
            I'm curious...what good would could result from creditor filing an AP with a claim 11 USC 727? I would think that as a creditor, if I could just prevent my debt from being discharged while allowing other debts to be discharged, that would just leave more disposable income for the debtors. Is my reasoning off base?
            Very astute but, if you have a vindictive creditor then making the debtor's life as miserable as possible would include attempting to get an entire discharge wiped out.

            Originally posted by Konallc View Post
            It would seem odd that investors would even care if we filed personal BK when our personal debts had nothing to do with the business. They could still potentially come after the business right?
            Yes, if the "loan" was to the entity but one must assume the entity has not assets so what would be the point? Investors tend to look at the one who persuaded them to part with their money, claiming that they were mislead to believe the business would net them a bundle. The problem is, the less sophisticated the investor the more likely they will be able to "prove" their case. Over the years I have dealt with many of these types of cases. Usual outcome is a settlement as litigating is quite expensive for both sides. In the past 12 months or so I had 2 cases settle and 1 case is currently on appeal (we lost) 1 case we won (no appeal by the creditor) and 2 cases are in "discovery mode". What I cannot tell you is how many of my clients over that 12 month period were worried about a 523/727 issue which never materialized. I assume it was significant in relation to the number of cases we filed.

            Des.

            Comment

            bottom Ad Widget

            Collapse
            Working...
            X