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Phillips Esq.
Phillips Esq., Attorney-at-Law
Category: Bankruptcy Law
Satisfied Customers: 13137
Experience:  B.A.; M.B.A.; J.D.
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I am looking to file bankruptcy but do not know its time now

Customer Question

I am looking to file bankruptcy but do not know it's time now or in future. We had to close our business due to a loss of a large microsoft contract. We could not pay all the creditors (all unsecured). There were 5 law suits and 4 have settled taking a default on our corporation. We are involved with the third creditor (EF) who has named my wife and I as individuals in addition to the corporation seeking to pierce the corporate vail claiming fraud and alter ego. We lost our personal home which is now in foreclosure sale (3/18/10). We made bad RE Investments and have been foreclosed and lost our retirement savings to bad investments and trying to hold on to personal residence. We owe, taxes of $80k and personal credit card debt of $80k. Our assets were lost in trying to start a new business, paying taxes and legal costs. Our only income is social security and we are now renting.

Questions:
1. Should we wait for judgments to seek BK?
2. Should we file BK now and stop all?
Submitted: 4 years ago.
Category: Bankruptcy Law
Expert:  Phillips Esq. replied 4 years ago.

I am looking to file bankruptcy but do not know it's time now or in future. We had to close our business due to a loss of a large microsoft contract. We could not pay all the creditors (all unsecured). There were 5 law suits and 4 have settled taking a default on our corporation. We are involved with the third creditor (EF) who has named my wife and I as individuals in addition to the corporation seeking to pierce the corporate vail claiming fraud and alter ego. We lost our personal home which is now in foreclosure sale (3/18/10). We made bad RE Investments and have been foreclosed and lost our retirement savings to bad investments and trying to hold on to personal residence. We owe, taxes of $80k and personal credit card debt of $80k. Our assets were lost in trying to start a new business, paying taxes and legal costs. Our only income is social security and we are now renting. Questions: 1. Should we wait for judgments to seek BK? 2. Should we file BK now and stop all?

Response: You should file for personal and business bankruptcy now to stop all the lawsuits. There is no point in waiting to file since if they get the Judgments they may then try to reach any assets you may have to satisfy the judgments. Filing for bankruptcy protection now stops further depositions on the case. However, there is a slight possibility that some of your creditors may file objection to your bankruptcy case. If this happens, the creditors would use the bankruptcy forum to litigate their disputes with you. In any event, in light of your situation, bankruptcy filing is still your better option.

Click on the links below to find local bankruptcy attorneys to assist you:

http://www.justia.com

http://www.attorneypages.com

http://www.lawyers.com

Customer: replied 4 years ago.

The Business (MEI) is not operational is a S corporation. This is the business that did not pay creditors. MEI funded a company MAS (an LLC) which is also named in the suit. We are receving no salaries from MAS just paying off $20,000 loan though operations.

 

1. Why wouldn't we just file a personal Bk at this time??

2. Let EF get a judgment against corporation?? They alreay have a notice of default judgment against MEI.

 

Note: There were funds tranferred out of MEI to pay for loans and salary deferals that are being claimed as fradulent as well as alter Ego.

Expert:  Phillips Esq. replied 4 years ago.
The Business (MEI) is not operational is a S corporation. This is the business that did not pay creditors. MEI funded a company MAS (an LLC) which is also named in the suit. We are receving no salaries from MAS just paying off $20,000 loan though operations.

1. Why wouldn't we just file a personal Bk at this time??

2. Let EF get a judgment against corporation?? They alreay have a notice of default judgment against MEI.

Note: There were funds tranferred out of MEI to pay for loans and salary deferals that are being claimed as fradulent as well as alter Ego.

 

 

Response: Depending on the totaling of your circumstances, you can file for just personal bankruptcy and deal with the business bankruptcy later. It is very important however that you consult with an experienced local bankruptcy attorney so that your situation and relevant documents can be reviewed before you decide whether to file for personal bankruptcy only or file for both personal and business bankruptcy at the same time.

Customer: replied 4 years ago.

Why would you file a business bankruptcy? There are no assets in MEI and it will be disolved shortly.

 

MAS will continue to operate until the debt is paid off then it will be closed.

 

Maybe I am missing somethiing, but I think its only necessary to file a personal BK which would clear the unsecured debt (credit cards, personal loans etc). Also, it would protect me from short sale exposure on personal house and foreclosed rentals.

 

Customer: replied 4 years ago.
When can I get an answer??
Expert:  Phillips Esq. replied 4 years ago.
Thank you for the additional information. You had a delay in getting your response because you opted me out. Once you opted me out, I was prevented from further communication with you...

Now back to your final concerns:

Why would you file a business bankruptcy? There are no assets in MEI and it will be disolved shortly.


MAS will continue to operate until the debt is paid off then it will be closed.


Maybe I am missing somethiing, but I think its only necessary to file a personal BK which would clear the unsecured debt (credit cards, personal loans etc). Also, it would protect me from short sale exposure on personal house and foreclosed rentals.

 

Response: If there are no assets and the company is going to be dissolved very soon, then there is no reason to file for business bankruptcy at this time. You cannot file for bankruptcy protection for a business entity that no longer exists, and also it would not be prudent to file for bankruptcy petition for a business entity that would be out of existence shortly after the bankruptcy petition is filed. That would not be proper use of your resources. ONLY a personal bankruptcy is necessary at this time to protect you from possible deficiency judgment arising from short-sale of your personal residence and foreclosure of your rentals.

 

Let me know if you need further clarification.



Edited by AttorneyPhillips on 3/6/2010 at 6:08 PM EST
Customer: replied 4 years ago.

Regarding the business bankruptcy for pending disloved corporation MEI. That is what I thought. Therefore the best alternative is a personal BK at this time?

 

Some other questions:

 

1. You mentioned:

 

However, there is a slight possibility that some of your creditors may file objection to your bankruptcy case. If this happens, the creditors would use the bankruptcy forum to litigate their disputes with you. In any event, in light of your situation, bankruptcy filing is still your better option.

 

a. We feel strongly this will happen and they will use all their discovery to convince the Trustee to exclude this case.

 

b. Therefore, wouldn't it be better to settle this case with a judgment and then file fo BK protection??

 

If I file now, then it may not include any other items that could come out of the judgment.

 

2. Regarding Deposition

 

The deposition is scheduled for Friday 3-12-10. They are probing for where the money went and a court has grated a motion to compel for items that I indicated was privileged personal information.

 

If I file BK this week, then how will this look to the trustee and will this deposition be allowd during the BK.?

 

3. Are there any links I can look at to see what is protected under california law for BK??

 

By the way, my legal action is filed in Federal Court in Santa, Clara, CA against my Corporations MEI, MAS and my wife and I personally.

 

Thanks,

 

Jim

 

 

 

Expert:  Phillips Esq. replied 4 years ago.

Regarding the business bankruptcy for pending disloved corporation MEI. That is what I thought. Therefore the best alternative is a personal BK at this time?

Response 1: Yes, that is correct.

Some other questions:

1. You mentioned:

However, there is a slight possibility that some of your creditors may file objection to your bankruptcy case. If this happens, the creditors would use the bankruptcy forum to litigate their disputes with you. In any event, in light of your situation, bankruptcy filing is still your better option.

a. We feel strongly this will happen and they will use all their discovery to convince the Trustee to exclude this case.

b. Therefore, wouldn't it be better to settle this case with a judgment and then file fo BK protection??

Response 2: Yes it would be better. However, the judgment creditors may object to the dischargeability of their debts/judgment. However, there is a strict deadline to file objections to dischargeability of debts and if the creditors do not file objection within that time frame, they have forever waived their rights to object in the future. The deadline to file objection is 60 days from the Section 341 Meeting.

If I file now, then it may not include any other items that could come out of the judgment.

Response 3: Point well taken. See my previous response—Response #2 above.

2. Regarding Deposition

The deposition is scheduled for Friday 3-12-10. They are probing for where the money went and a court has grated a motion to compel for items that I indicated was privileged personal information.

If I file BK this week, then how will this look to the trustee and will this deposition be allowd during the BK.?

Response 4: If you file for bankruptcy this week, the deposition would be suspended. Then the Plaintiff/your creditor would then have to file a Motion from Relief from the Automatic Stay from the bankruptcy Court for permission to continue with the State Court case. The bankruptcy trustee does not have anything to do with your state Court case. It would be up to the Plaintiff to file adversary proceeding in the bankruptcy Court or to ask permission to continue with the State Court case. This Motion for Relief from the Automatic Stay must be granted before your deposition can resume.

3. Are there any links I can look at to see what is protected under california law for BK??

Response 5: I am assuming here that you are talking about exemptions--what you are allowed to keep. Here are the links:


http://www.moranlaw.net/703.htm

http://www.moranlaw.net/704.htm


Expert:  Phillips Esq. replied 4 years ago.

Regarding the business bankruptcy for pending disloved corporation MEI. That is what I thought. Therefore the best alternative is a personal BK at this time?

Response 1: Yes, that is correct.

Some other questions:

1. You mentioned:

However, there is a slight possibility that some of your creditors may file objection to your bankruptcy case. If this happens, the creditors would use the bankruptcy forum to litigate their disputes with you. In any event, in light of your situation, bankruptcy filing is still your better option.

a. We feel strongly this will happen and they will use all their discovery to convince the Trustee to exclude this case.

b. Therefore, wouldn't it be better to settle this case with a judgment and then file fo BK protection??

Response 2: Yes it would be better. However, the judgment creditors may object to the dischargeability of their debts/judgment. However, there is a strict deadline to file objections to dischargeability of debts and if the creditors do not file objection within that time frame, they have forever waived their rights to object in the future. The deadline to file objection is 60 days from the Section 341 Meeting.

If I file now, then it may not include any other items that could come out of the judgment.

Response 3: Point well taken. See my previous response—Response #2 above.

2. Regarding Deposition

The deposition is scheduled for Friday 3-12-10. They are probing for where the money went and a court has grated a motion to compel for items that I indicated was privileged personal information.

If I file BK this week, then how will this look to the trustee and will this deposition be allowd during the BK.?

Response 4: If you file for bankruptcy this week, the deposition would be suspended. Then the Plaintiff/your creditor would then have to file a Motion from Relief from the Automatic Stay from the bankruptcy Court for permission to continue with the non-bankruptcy Court case. The bankruptcy trustee does not have anything to do with your non-bankruptcy Court case. It would be up to the Plaintiff to file adversary proceeding in the bankruptcy Court or to ask permission to continue with the non-bankruptcy Court case. This Motion for Relief from the Automatic Stay must be granted before your deposition can resume.

3. Are there any links I can look at to see what is protected under california law for BK??

Response 5: I am assuming here that you are talking about exemptions--what you are allowed to keep. Here are the links:


http://www.moranlaw.net/703.htm

http://www.moranlaw.net/704.htm


Expert:  Phillips Esq. replied 4 years ago.

 

Regarding the business bankruptcy for pending disloved corporation MEI. That is what I thought. Therefore the best alternative is a personal BK at this time?

 

Response 1: Yes, that is correct.

 

Some other questions:

1. You mentioned:

However, there is a slight possibility that some of your creditors may file objection to your bankruptcy case. If this happens, the creditors would use the bankruptcy forum to litigate their disputes with you. In any event, in light of your situation, bankruptcy filing is still your better option.

a. We feel strongly this will happen and they will use all their discovery to convince the Trustee to exclude this case.

b. Therefore, wouldn't it be better to settle this case with a judgment and then file fo BK protection??

 

Response 2: Yes it would be better. However, the judgment creditors may object to the dischargeability of their debts/judgment. However, there is a strict deadline to file objections to dischargeability of debts and if the creditors do not file objection within that time frame, they have forever waived their rights to object in the future. The deadline to file objection is 60 days from the Section 341 Meeting.

 

If I file now, then it may not include any other items that could come out of the judgment.

 

Response 3: Point well taken. See my previous response-Response #2 above.

 

2. Regarding Deposition

The deposition is scheduled for Friday 3-12-10. They are probing for where the money went and a court has grated a motion to compel for items that I indicated was privileged personal information.

If I file BK this week, then how will this look to the trustee and will this deposition be allowd during the BK.?

 

Response 4: If you file for bankruptcy this week, the deposition would be suspended. Then the Plaintiff/your creditor would then have to file a Motion from Relief from the Automatic Stay from the bankruptcy Court for permission to continue with the non-bankruptcy Court case. The bankruptcy trustee does not have anything to do with your non-bankruptcy Court case. It would be up to the Plaintiff to file adversary proceeding in the bankruptcy Court or to ask permission to continue with the non-bankruptcy Court case. This Motion for Relief from the Automatic Stay must be granted before your deposition can resume.

 

3. Are there any links I can look at to see what is protected under california law for BK??

 

Response 5: I am assuming here that you are talking about exemptions--what you are allowed to keep. Here are the links:

 

http://www.moranlaw.net/703.htm

 

http://www.moranlaw.net/704.htm



Edited by AttorneyPhillips on 3/7/2010 at 5:32 PM EST
Customer: replied 4 years ago.

Regarding your response below:

 

If I file BK this week, then how will this look to the trustee and will this deposition be allowd during the BK.?

 

Response 4: If you file for bankruptcy this week, the deposition would be suspended. Then the Plaintiff/your creditor would then have to file a Motion from Relief from the Automatic Stay from the bankruptcy Court for permission to continue with the non-bankruptcy Court case. The bankruptcy trustee does not have anything to do with your non-bankruptcy Court case. It would be up to the Plaintiff to file adversary proceeding in the bankruptcy Court or to ask permission to continue with the non-bankruptcy Court case. This Motion for Relief from the Automatic Stay must be granted before your deposition can resume.

 

1. Jim>: How big of an issue is this to do for the Plaintiff?? I would not be able to fight it as I have no resources to fight?

 

Note: The Plaintiff has made a strong but not accurate case this money belongs to them and they are pushing very hard for discovery. I suspect they are also searching for any and all assets they can find for future attachment when a judgment is grated. There is a good chance they will discover this through the deposition. I can not continue to fight them as I have no resources.

 

2. Jim>: What I am trying to decide is the following:

 

a. Go to the deposition an allow them to complete discovery now

or b. Use BK as a strategy to stop depositoin it entirely

 

 

My concern, having going through all this legal work for the last 2.5 years and 1 year In Pro Per, a BK filing will just cause this to continue for more years and not allow me the freedom have a life. I have retired in 2008 and are living month to month in a rental house.

 

Hope this helps you understand why I keep asking the questions.

 

Jim

Expert:  Phillips Esq. replied 4 years ago.

 

Regarding your response below:

 

If I file BK this week, then how will this look to the trustee and will this deposition be allowd during the BK.?

 

Response 4: If you file for bankruptcy this week, the deposition would be suspended. Then the Plaintiff/your creditor would then have to file a Motion from Relief from the Automatic Stay from the bankruptcy Court for permission to continue with the non-bankruptcy Court case. The bankruptcy trustee does not have anything to do with your non-bankruptcy Court case. It would be up to the Plaintiff to file adversary proceeding in the bankruptcy Court or to ask permission to continue with the non-bankruptcy Court case. This Motion for Relief from the Automatic Stay must be granted before your deposition can resume.

 

1. Jim>: How big of an issue is this to do for the Plaintiff?? I would not be able to fight it as I have no resources to fight?

 

Final Answer 1: I do not know. Any attempt by me to answer this question without the benefit of all the facts that have gone on in this case along with all the documents will be purely speculative. The Plaintiffs are the only ones that know how much they are going to push the case.

 

Note: The Plaintiff has made a strong but not accurate case this money belongs to them and they are pushing very hard for discovery. I suspect they are also searching for any and all assets they can find for future attachment when a judgment is grated. There is a good chance they will discover this through the deposition. I can not continue to fight them as I have no resources.

 

2. Jim>: What I am trying to decide is the following:

 

a. Go to the deposition an allow them to complete discovery now

or b. Use BK as a strategy to stop depositoin it entirely

 

Final Answer 2: Your bankruptcy filing is only going to stop the deposition temporarily until the Plaintiffs file a Motion for Relief from the Automatic Stay and get permission from the bankruptcy Court to proceed with the deposition. IN OTHER WORDS, YOUR BANKRUPTCY FILLING MAY NOT STOP YOUR DEPOSITION PERMANENTLY IF THE PLAINTIFFS DECIDE TO PURSUE THE CASE AND FILE A RELIEF FROM THE AUTOMATIC STAY FOR PERMISSION TO CONITINUE WITH THE DEPOSITION.

 

My concern, having going through all this legal work for the last 2.5 years and 1 year In Pro Per, a BK filing will just cause this to continue for more years and not allow me the freedom have a life. I have retired in 2008 and are living month to month in a rental house.

 

Hope this helps you understand why I keep asking the questions.

 

Jim

 

I do not have anything else to add to this post.

 

Best wishes,

 

Customer: replied 4 years ago.

Regarding BK. I need some help sorting out best alternative:

 

Current Situation:

 

1. Short Sale Exposure from Personal House from Schwab Bank $120k

(Total owed: $250k, Schwab will get from Short Sale $130K)

 

Can the $120k be dismissed through bankruptcy?

Can I use BK this leverage to get them to release me without recourse??

 

2. Have 5 rental houses that went into foreclosure in Arizona that are now bank owned.

 

Have exposure from difference in mtg value and foreclose price $270k.

Can these properties be discharged through personal bankruptcy.

 

3. Have credit card debt of $80k. Can this be discharged through personal BK??

 

4. Current situation: Living on Social Security income only and renting. No other income. Have car, paid in full thats worth $7000.00. $3k in bank account. Only income is $3.4k/month Social Security with help from my disadvantged daughter that is living with us who is helping out with $700/month. My wife and are are retired since 2008 and are both 66 years old.

 

 

5. Have ongoing legal civil suit that is in discovery phase where plaintiff is trying to break the corporate veil and pursue us personally. Entry of default already file against corporation. Just waiting for personal attact to settle.

 

 

 

Therefore, I need some general direction to options available to me??

 

1. File Bankruptcy now??

 

a. If So what type of Bankruptcy (chapter 7, 11 or 13)?

 

2. Can I dismiss debt on 2nd and other real estate mtgs by filing now or can I dismiss them filing later (after civil case has been settled)??

 

Hope to hear from you soon on this as I need to file before the property is sold, I believe..

 

Thanks,

 

Jim

 

 

Customer: replied 4 years ago.

One more point. The legal action is in Federal court.

 

Is it best to claim exemptions:

 

a. Under California options

b Federal

 

If so what are the differences. Just provide highlight and send link for details and I will review.

 

Thanks,

 

Jim

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