Bankruptcy Law Questions? Ask a Bankruptcy Lawyer Now.
Was the money your wife paid to the LLC a loan repayment?By "estate guy", do you mean the Bankruptcy Trustee?
Is your household net gross income too high for a Chapter 7?
-It could be, with proper paperwork.
-chapter 7 can I keep the LLC? We want to keep it. No, its not too high for Chap 7
The money your wife sent to the LLC would have to be reported only if it was a loan repayment. Then it could be viewed as preferential (insider) creditor treatment. Otherwise, that payment would not be accounted for on the Bankruptcy petition - as there is no place to put it - unless it is still sitting in the LLC, in which case it would be listed as an asset.
In summary, the payment itself would not be listed, unless that money is still available.
By the way, one does not have to file a Chapter 13 to keep a business. The main reason for filing a Chapter 13 is that one's household income is too high for a Chapter 7.
I think this is what you wanted to know. If not, please let me know.
How do I keep my LLC then with Chapter 7 then? We are about to file IP on the company's behalf and about to produce a product. Notice the 'about'. In either case the company has no product and no IP yet. We have 10k left in cash which is about to go to some software and services.
If we filed chap 7, we would have maybe 1-2k in the company account, but no hard assets, no IP. How do I explore this issue more with you?
Having an LLC does not prevent a debtor from filing a Chapter 7. Conversely, filing a Chapter 13 will not prevent a debtor from losing the LLC.
The factor that determines whether a debtor can keep the LLC is the market value of the LLC - including its assets. If an LLC cannot be sold (for instance if it involves a process or processes that only the current owner can perform), it has no market value as a whole, but may have salable assets the Bankruptcy Trustee could take (bank accounts, property that can be sold, etc.) and sell.
The LLC is treated as a asset, along with the debtor's other assets - such as the house and the car. If any of these have a market value or equity that exceeds the allowable amount (aka an exemption), those assets can be taken by the Bankruptcy Trustee.
I thought that Chapter 13 was in lieu of asset liquidation. So it seems if my assets, + LLC company valuation, exceeds the exemption in Georgia for chap 13 (or 7) then the trustee will offer to "sell it back to me" or sell it to cover the difference? Correct?
Will my CPA be good enough for a valuation or will the BK court appoint one? How do I grasp some element of certainty about the outcome, in order to gauge the risk level of whether to move forward?
The only way to keep assets that have more value than the allowable exemption is to file a Chapter 13 and pay all creditors in full within 5 years. Doing this does not make sense unless necessary to keep certain important secured assets, such as the house or car.You would not be able to buy back the LLC because the Trustee can take the money you would use to buy back the LLC with, and also sell the LLC - if salable.
In general, it is allowed for a debtor to provide an independent evaluation of assets. However, if this is done by the Trustee, the Bankruptcy court has to pay for it, instead of your paying for it.
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