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Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 30897
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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I would like to file a personal Chapter 13 bankruptcy, however,

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I would like to file a personal Chapter 13 bankruptcy, however, I own an S Corp which is profitable and growing. The S Corp has credit lines with all of my vendors and I am in good standing with them all. I do not want to wreck the good standing of the S corp because of my personal bankruptcy, and I also need to be able to use the money in my S corp to continue business by paying my vendors against the credit lines and purchasing cost of goods sold items. How will a personal chapter 13 affect this?
A S-Corp is a separate entity from you personally. Filing a personal bankruptcy should have little or no effect on your company. The only effect it could have is if any of your business accounts are guaranteed by you personally, the fact that you're in bankruptcy could limit, freeze or close those accounts.
Customer: replied 6 years ago.

The lawyer I consulted before mentioned that in a chapter 13, the trustee will question large payments that go out from my bank accounts, including the corporate bank account. So, as an example, if I restructure my personal debt, then pay a corporate creditor $40,000, will the trustee be able to cancel my proceedings, or worse yet, sue my creditor to reclaim the money?

The trustee would have to prove that the money was actually your personal money and not the money of the company, which would be difficult.


Also, if you're in a 13, you're repaying your debts instead of having them discharged. Thus, it is not as likely that the trustee will take issue with this.

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