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TJ, Esq.
TJ, Esq., Attorney
Category: Bankruptcy Law
Satisfied Customers: 11783
Experience:  JD, MBA
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Effects of Bankruptcy on a newly formed LLC?

Resolved Question:

I am in the process of filing for personal bankruptcy, I am also in the beginning stages of filing for an LLC for a small business venture with a partner. There is currently no revenue from the business and no assests, the only money invested is half of the LLC cost, less than $500. What effect is the bankruptcy going to have on the LLC and what effect is the forming of the LLC going to have on the Bankruptcy?
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  TJ, Esq. replied 7 years ago.

Hello and thank you for allowing me the opportunity to assist you.

Question: “What effect is the bankruptcy going to have on the LLC and what effect is the forming of the LLC going to have on the Bankruptcy?”

Answer: Well, the bankruptcy won’t really have a direct affect on the LLC itself, but your share of the LLC will be considered an asset. Depending on its value, your share could be sold, or the bankruptcy trustee could take over management of your share (i.e. he would make business decisions rather than you). It may be a good idea to wait until after the bankruptcy to start the LLC.

Have I satisfactorily addressed your concerns? If not, then please feel free to ask for clarification.

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DISCLAIMER: Please understand that the complexities of most legal problems cannot be adequately addressed in this setting, and that I am only licensed to practice law in the State of Maryland. Accordingly, by continuing in this discussion and/or by “accepting” my answer you acknowledge that (1) we have not formed an attorney-client relationship, (2) my answer is general information only and is not legal advice, and (3) you should not rely on my answer in undertaking any course of action without first consulting with an attorney in person who can review all relevant facts.

Customer: replied 7 years ago.
sorry, I have been out of town on business and did not have access to my personal email accounty. Follow up question, since there is no value in the LLC, less than $500, can a portion of the homestead exemption be used to protect what little interest I have in the LLC?
Expert:  TJ, Esq. replied 7 years ago.
That depends on where you live. Even though bankruptcy law is primarily based on Federal law, the States were granted the authority to determine which exemptions apply, and how they apply.

If you let me know your State, I can look it up.

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DISCLAIMER: Please be aware that only an attorney licensed in your state is authorized to advise you in legal matters, and that the limitations of this setting may prevent your legal issues from being thoroughly addressed. Accordingly, please understand that (1) by answering your question(s) I am not acting as your attorney, (2) my answer(s) should be construed as general information only, and (3) our discussion is not an adequate substitute for an in-person consultation with an attorney.

Customer: replied 7 years ago.
I am in virginia
Expert:  TJ, Esq. replied 7 years ago.
Yes, in Virginia you may use any remaining portion of your homsestead exemption to protect other non-exempt property.

Have I satisfactorily addressed your concerns? If not, then please feel free to ask for clarification.

.

DISCLAIMER: Please be aware that only an attorney licensed in your state is authorized to advise you in legal matters, and that the limitations of this setting may prevent your legal issues from being thoroughly addressed. Accordingly, please understand that (1) by answering your question(s) I am not acting as your attorney, (2) my answer(s) should be construed as general information only, and (3) our discussion is not an adequate substitute for an in-person consultation with an attorney.

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