How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Maverick Your Own Question
Maverick, Attorney
Category: Bankruptcy Law
Satisfied Customers: 5745
Experience:  20 years of professional experience
Type Your Bankruptcy Law Question Here...
Maverick is online now
A new question is answered every 9 seconds

Bankruptcy. California. Client has significant personal credit

Customer Question

Bankruptcy. California. Client has significant personal credit card debt and is upside down on his home. He owns a corporation. The corporation owes its creditors a significant amount of money, more than the value of its computers and other misc. equipment. The client personally guaranteed some of the corporate debt. The corporation is starting to bring in new clients, but not enough to save the company or the client's personal finances. Client wants to file ch. 7 and list the personal guarantees. Should he just walk away from the old corporation, start a new one with the new clients and let the creditors of the old corporation take the existing corporation's computers and equipment, if they want them? If not, what might be alternative approaches?
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  Maverick replied 7 years ago.

The proper way to handle this would be to file a Chapter 7 on the corporation and then dissolve the corporation by filing articles of dissolution with the secretary of state. At the same time, the individual would also file for chapter 7 so as to discharge his personal obligations. However, under the 2005 BK laws he may not be able to file Chp 7 and may be forced into a Chp 13 repayment plan.


The other option is for the corporation to file a chapter 11 and for the individual to file a chapter 13 and try to save the business. Under this scenario, both will be under a repayment plan as to secured debt and will likely pay pennies on the dollar for unsecured debt.


Please click ACCEPT so I can get credit for my work. We can continue our conversation after this at no additional charge.