Another S-corp in trouble

[chefmolnar]

I'm new here, so before I dive in, I would like to thank you all for what you're doing. I've never been more stressed in my life and this has all been so helpful.

I have an S-corp and we haven't been able to keep up with our monthly payments to our creditors due to the economy and the phone calls have been underway for about 30 days now at home and at work. We have around 300K in unsecured credit cards and lines of credit. A collection agency called my cellphone today about a $600 past due credit card bill. And I think we've got a couple of certified letters coming our way regarding past due lines of credit payments.

I'm meeting with my lawyer on Thursday to go over options. The thing is, the nature of my business is that three or four months from now, we could be overflowing with work. In fact, there are several new and returning clients who we're talking with about further work. Just not immediately -- perhaps within the next two months. Now, of course there are no guarantees of anything, but after ten years of being in business, we've clawed our way out before.

I intend to ask my attorney if there's any way we can buy some time with our creditors. If not, it's C7 for me because I'm worried that liens are the next shoe to drop. But it would be such a shame to walk away from a mountain of potential revenue.

Have any of you been in this situation? Any success with lawyers jumping between you and your creditors?

[HHM]

Well, you can't base your decision on "what ifs", that is how most business people end up here.

Does your business have assets of any meaningful value?
Is the bulk or, or most your debt your personal guarantees on the debt?
Does your total unsecured business exceed your personal debt (i.e mortgage, personal credit cards etc).

Generally, at a minimum, it is probably in your best interest to file a personal BK (chap 7) to unload your personal gaurantees. That will protect you and your personal assets, and buy you some breathing room to try and turn things around.

[chefmolnar]

Well, you can't base your decision on "what ifs", that is how most business people end up here.

You're exactly right.

Does your business have assets of any meaningful value?

Computer equipment, desks, chairs and the usual office stuff. We're a new media company so a lot of our "assets" are in the form of my intellectual property. Short films, videos, animation, etc. I also own a holding company that owns our studio space. But we're in the process of selling it, and I'm working out of my home.

Is the bulk or, or most your debt your personal guarantees on the debt?

All of it.

Does your total unsecured business exceed your personal debt (i.e mortgage, personal credit cards etc).

No it doesn't. Also, I don't have any personal unsecured debt / credit cards. Just a mortgage and a home equity loan, both of which I'm entirely up-to-date and on-time with payments.

Generally, at a minimum, it is probably in your best interest to file a personal BK (chap 7) to unload your personal gaurantees. That will protect you and your personal assets, and buy you some breathing room to try and turn things around.

That sounds like the way to go.

Gosh, I can't tell you how much I appreciate this opportunity to "talk." The stress was overwhelming. But I'm at the point where C7 sounds like a relief compared with the stress of dealing with the calls and so on.