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Several issues at play.
1. who signed for the debt? her? the LLC? or is there a personal guarantee for the biz debt?
If the debt is solely in the LLC name, with no personal guarantees, she should not file personal bankruptcy.
All debt is in her name personally...No LLC debt
So the building is in her name personally for the biz?
i see. ok.
here is what I see...
Ch7 - she would lose her home.
It sounds like there is too much equity to file ch7.
for Chapter 13, she would be paying 100% to the unsecured debts.
She could surrender the building in full satisfaction of the total claim.
How much is owed on her home?
She owes about 18k with a tax assessed value of about 94k
As of April 1, 2010 there are new debt ceilings for chapter 13.Secured Debt Limit $1,081,400Unsecured Debt Limit $360,475
so she should be under the debt ceiling for 13,
so, she could propose a 100% repayment plan to the unsecured debts, and surrender the building.
in the chapter 13.
Ch7 is too risky. the court liquidates any unexempt assets to pay the unsecured debts, so her home is vulnerable.
she can surrender in full satisfaction of the total claim in her Ch13 plan for the building, leaving no deficiency.
So she cant file 7 with that much equity even if her offer in compromise is 100%? She does also have unsecured priority tax debt (less than 3 years old) of about $30k...I dont think that she can pay that in to the IRS in full only the unsecured non-priority debt
if the creditor does not object, then it will be discharged and they take the title back (thru foreclosure)
There is no offers in ch7.
the trustee liquidates any and all assets to satisfy as much of the unsecured debts as possible.
debtor doesn't have a say.
payment would be approx $733 for 60months to pay $30k in tax and $10k unsecured, including trustee's costs.
in a ch13, a debtor must pay back enough to protect the assets.
Sorry, I thought in a chapter 7 you could offer an amount to "buy back" the equity in an asset...(offer in compromise)...Is this not correct?
so if there is $75 unexempt that the trustee could get to if they sold her home, then she must pay back 100% of the $40k in unsecured debt she has.
yes, here she can pay $40k to do so
they won't accept less, knowing that the assets are worth more than the debt.
the court would not allow it, since the creditors are not getting their fair share.
There is really no offer in compromise as you describe in a chapter 7.
Ok...I see...So offer in compromise would also have to include all taxes as well...
you can buy the asset sure, but the court will only approve the amount if that is what the liquidation would be. they may discount it slightly since they won't need to sell a home, so you can offer lesser amount (discount for the value of the brokers costs etc)
yeah, since they are unsecured, taxes are paid too in the liquidation.
priority (less than 3yrs) or non-priority, does not matter.
Got it...So unless she can come up with a 100% OIC that would also pay for all of her taxes, then she has to do a 13...Is that correct?
you got it
any last questions?
she may want to talk to the lender to see if they will just do a deed in lieu of foreclosure.
I think she could handle the non-priority, but not the priority in an OIC...thanks for your help
before she files bk. that would be my other suggestion.
great...I appreciate your help very much
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