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Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 29575
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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I have sought the advice of 2 pers. bankruptcy attys who have

Resolved Question:

I have sought the advice of 2 pers. bankruptcy attys who have advised I file for Ch 7 separate of my spouse. I have appx. $70K in unsecured cc debt. I work for myself as a Fla. licensed commercial real estate appraiser & broker. I have worked on my own for 5 yrs, after 18 yrs w/another co. My co. is an LLC w/an add'l $35K in cc debt that doesn't show on my credit report. Both attys have indicated I cannot include that debt in the bankruptcy. Both also advised I let the company die, have someone capitalize a new company for me (where I will be the owner) and the creditors owed money by the LLC will not be able to collect, and will not try. My gut tells me there's something wrong. It is reasonable I could pay the LLC debt eventually. I don't want to commit fraud, or appearance of, jeopardize my licenses, reputation, and ability to work. My credit is 780, never missed a pymt, & still have $90K credit avail, but I 'm sinking & have to borrow to make pymts. What should I do?
Submitted: 6 years ago.
Category: Bankruptcy Law
Expert:  Roger replied 6 years ago.

Your personal financial condition will effect your LLC as I'm sure most of your vendors/suppliers require personal guarantees. In that event, if you file bankruptcy, it's going to hinder your ability to maintain and open new credit - because a personal bankruptcy will show up on a credit check for the personal guarantee.


Also, if your company files a Ch. 7, it will have to shut down,and you'll have to start up a new one. However, if you work in the same circles over and over, this could hinder your operations.


My advice to all clients is that bankruptcy should be the last option because it totally changes your life and will effect you for a decade or longer! Thus, all other options should be exhausted before filing.


With regard to the personal filing, you should try to work out a payment plan with the creditors. Contrary to popular belief, most creditors are willing to work out payment plans interest deferred/interest free - they don't want to see you file bankruptcy either (it guarantees that they won't get paid much, if anything).


Also, if you believe you can get your LLC's debts under control, there is certainly no reason to file.


If things get worse, you could consider filing a Ch. 13, which is a reorgainzation of debt. You get to keep all of your possessions and property and your debts are paid back over 3-5 years interest free. Because you're paying your debts instead of discharging them as in a Ch. 7, creditors don't view a Ch. 13 filing as a terrible thing - like they do with a Ch. 7.




Customer: replied 6 years ago.

Thank you Mr. Kirk. I appreciate your quick response, but was looking for guidance more on the business aspect. (On the personal end, I understand that I will take a severe hit regardless of whether I do Ch. 7 or debt settlement. This is not a decision I've committed to, or am considering lightly - trust me, my stomach has been in knots for weeks. My ability to take care of myself and children is my primary concern).


That aside, assuming I do file personal Chapter 7, is the advice I received on letting the company die, having someone capitalize a new busines w/unrelated funds - of which I will be the owner -- and walking away from that debt reasonable?


Is there a chance there I could be held liable and have action taken against me that could be considered fraud which would affect either of my state licenses?


I've researched this topic extensively, and again have consulted (and paid $600 in deposits to) two attorneys, and really need to know where to head on the business side.


Expert:  Roger replied 6 years ago.

Letting the company die and restarting with a "front man"/ "money man" for a new venture is fairly common.


It's not fraud because the LLC is responsible for the debts, and the LLC will take responsibility via the bankruptcy. The result will be that the creditors won't get paid, but that's not illegal.


This may cause you some trouble with business relationships. The creditors you leave out in the cold won't likely do business with your new company.

Customer: replied 6 years ago.

Okay - almost there. I can tell by your thoughtful responses that you must truly take an interest in your clients' wellbeing. I intend to accept your response, so thank you for bearing w/me w/this one last clarification.


The attorneys have advised:


I file personal bankruptcy, the business debt cannot be included. The business will not file a separate bankruptcy, but rather I should walk away and let the business die.


Is it reasonable if the business does not file bankruptcy, and I walk away and start a new company, under my name w/someone elses funds?


I appreciate your help.



Expert:  Roger replied 6 years ago.

If bankruptcy is filed, it should be filed personally and for the business - in my opinion.


If the business does not file, you're going to eventually be sued by creditors for unpaid accounts, and any pending projects you're working on could sue you for walking away/breaching the contracts.


I would not suggest walking away from the business while it owes creditors because of the fallout that will eventually come. It is better to round up the company's business via a bankruptcy and get a fresh start.


You're going to have to deal with these creditors at spme point. I'd rather deal with them on my terms - via the bankruptcy - than on theirs - when you're sued all over the country by these creditors.



Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 29575
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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