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Ask Ellen Your Own Question
Ellen, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36714
Experience:  Bankruptcy Lawyer. Experienced.
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I have a 1 yr. old business that is not showing a profit yet,

Resolved Question:

I have a 1 yr. old business that is not showing a profit yet, mostly due to the high interest credit lines/card pmts. of $2,600 mth., which all goes to interest. (Total owed is $80,000) I've had no luck negotiating the rates down or getting consolidation loan. I also own a home that is now worth less than what I owe. I don't have any other income, stocks, savings, etc. just a $3,000 car and furniture for assets. Bankruptcy seems the only option, though I hate to give up my business so soon when it could make it w/o the mthly. interest pmts. IS CHAPTER 7 or 13 AN OPTION FOR ME vs. SOMETHING ELSE? WHAT WOULD BE REQUIRED W/ MY BUSINESS, AS FAR AS HAVING TO INCLUDE IT IN THE BANKRUPTCY OR TRY TO SELL IT FIRST? I'm told by a realtor that it would list for about $40,000 and I'd be lucky to sell it in this economy.
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  Ellen replied 7 years ago.


Thank you for your question. I am happy to assist you.


A Chapter 13 bankruptcy appears to be the solution. Let me explain.

As an individual, there are two types of bankruptcy available. A Chapter 7 and a Chapter 13.

There are distinct differences in between a Chapter 7 and a Chapter 13 bankruptcy.

A Chapter 7 bankruptcy could discharge (erase) all of your credit card debt. It would be an opportunity for a fresh financial start. Depending on whether your business would have value to a third party, you may lose the business.

A Chapter 13 bankruptcy is a repayment plan for an individual. It may require that you repay some of your unsecured credit card debt over a 3 -5 year period. It would allow you to retain your business.

I hope that the information which I provided was helpful to you.

Customer: replied 7 years ago.
Would it make any difference of chapter 7 vs. 13 if about half the debt is in my name AND the business name and the other half is not? (personal line of credit)
Expert:  Ellen replied 7 years ago.
For bankruptcy purposes, it would not typically matter. In a 13 all debt that is in your name would go on the plan, regardless of whether the business also was indebted.
Ellen and other Bankruptcy Law Specialists are ready to help you