Personal Guarantees on Business Bancruptcy Question

[beowolf]

Hi everyone, this is my first post on this forum. We are seriously looking at filing personal Ch 7 and own a small business LLC. Our lease and various loans/CCs all have personal guarantees. It will not be feasible to keep our business running if we file. Do I need to file a business Ch. 7 if everything has a personal guarantee or should I just list it my personal and shut the business down?

[southernbelle]

I'm also a non-consumer chapter 7, but I filed personal BK because I was a sole prop as opposed to LLC, but even if I were LLC, I had so many personal guarantees, it might not have helped a whole lot to protect me against judgements and collections.

If I were you I would meet with a few attys in your area prior to filing to get additional information because business bk's are tricky and there's lots of information that won't apply to you like the Mean's test, but your schedules I and J will still need to show little or no disposable income to prevent any major problems from the Trustees.

I closed my business prior to filing and filed a personal bk. Hopefully you will find the answers you need by meeting with attys and researching on this forum. This forum has been a great source of information for me and hopefully it will help you as well.

[fltoo]

Same here, sole prop and all business stuff personally guaranteed. Doing a personal chap 7. My lease and all business related bills were paid though.

I sold off the assets, business is still running with new owner. I am bankrupting the cc's.

[AnnaO]

I filed personal chapter 7 all because of a business. I had very few personal debts - it was nearly ALL for the business. There really is no bankruptcy for a business entity that discharges debt. Both types of bankruptcies that apply to businesses are for restructuring debt. Even though I had a c corporation, because I was a new business, most debts required a personal guarantee. There is very little protection for new business owners (and I was too stupid to know how to seek out that protection).

I had my trustee meeting yesterday, and now I'm very nervous. I'm now employed with a good job and I think the trustee may see that as a reason to investigate further and see if he can get any future assets or something like that. Also I live in a community property state - which sucks!!! - and that puts my husband's assets at risk. I have to do more research online, and will be praying every day until this is resolved.

I just try to reassure myself that no matter what happens now, at least I never have to go back to that awful, stressful, horrible business ever again.

To anyone who is tempted to start their own business - DON'T!!! It's not worth it (but that is just my opinion).

A.O.

[fltoo]

Sad, isn't it, that people are afraid to go into business anymore?

High lease payments, tangible tax, unemployment tax, workman's comp, and on and on and on.

Did you know that the small business is the largest employer in the nation?

Did you know that the small businesses are the building blocks in the economy that all other businesses build on?

Years ago, it seems that the small business was much more successful.
Consider this......people paid by cash or by check.

Now, not saying that I know anyone who did this, LOL, but, a lot of registers were emptied every night to hedge costs.

Consider now how people pay for their purchases........yup, credit cards. Receipts are deposited right into your business checking account.

[crazycat]

Personal Guarantee on Business debt, LLC etc

.....small world..we are currently in similar circumstances...several attorneys have advised Us to do Chap 7 Personal BK and simply dissolve the LLC..,& close the LLC bank Accounts. ..and That is just what we have recently done. That avoids the potential of having to defend against potential future lawsuits for possible debt collection or judgements....If you need to continue to operate a business entity, just do it then as a sole proprietor with a New DBA and new accounts.....

[tomato]

I just try to reassure myself that no matter what happens now, at least I never have to go back to that awful, stressful, horrible business ever again.

To anyone who is tempted to start their own business - DON'T!!! It's not worth it (but that is just my opinion).

Boy, do I ever know how you feel! I was debt-free with stellar credit before I started my business, and now I'm filing BK...as much as that sucks, I feel SO relieved to have the terrible stress and responsibility behind me.

But I still wouldn't say it's a bad idea to start a business. It's just a bad idea to finance a business on credit cards. I'm sure I'll have another go at being my own boss when this is well behind me, but next time I'll do it with my own money, and on a smaller scale.

[southernbelle]

I filed personal chapter 7 all because of a business. I had very few personal debts - it was nearly ALL for the business. There really is no bankruptcy for a business entity that discharges debt. Both types of bankruptcies that apply to businesses are for restructuring debt. Even though I had a c corporation, because I was a new business, most debts required a personal guarantee. There is very little protection for new business owners (and I was too stupid to know how to seek out that protection).

I had my trustee meeting yesterday, and now I'm very nervous. I'm now employed with a good job and I think the trustee may see that as a reason to investigate further and see if he can get any future assets or something like that. Also I live in a community property state - which sucks!!! - and that puts my husband's assets at risk. I have to do more research online, and will be praying every day until this is resolved.

I just try to reassure myself that no matter what happens now, at least I never have to go back to that awful, stressful, horrible business ever again.

To anyone who is tempted to start their own business - DON'T!!! It's not worth it (but that is just my opinion).

A.O.

AMEN sista!!!! I had gold and platinum credit cards my credit score was decent and none of my personal bills were behind. Almost all of my debt was due to that stupid business. I now tell everyone I come in contact with that are even remotely interested in starting their own business, DONT!!!!! You end up devoting all of your time and energy into a business and it slowly takes over your life. You have little or no time for your self and you think about it 24 / 7. Its stressful and find good dependable people to help you is virtually impossible.

I was also not smart enough to seek out protection from an LLC or something that would give me some sort of shield from the debts I'm now dealing with, but I learned that lesson too late.

I hope everything works out for you because this ordeal has been something I wouldn't wish on my worst enemy.

[newme]

We also filed chpt 7 bk because of a failed business. The business we used to own incurred way too much debt, and we were tied to a five year lease. There wasn't enough customers to keep the business alive, and what little we did make always went right back into the business. We were drowning in debt, so had no choice but to file. We will however, after everything is said and done, open up a new business that will cost nothing to run - no loans needed, no inventory stocked, no physical office needed - just a p.o. box. It was an idea that was born from the failed business, so in the end, I can't complain too much. I guess what I am saying is, if you have to close down your business, go ahead and close it down, file chpt 7, then when all is said and done, form a new one : ) . We all learn from our failures, so your next business WILL be more successful.

[bmrigs]

Just so you know, a single member LLC is considered a sole proprietor according to the IRS.