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Ask Terry L. Your Own Question
Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2862
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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My husband is appling for disabilitiy. We have had a S Corp

Resolved Question:

My husband is appling for disabilitiy. We have had a S Corp for 20 years. About 10 years ago my husband started having health problems. We were advised to pay health bills and not to pay credit cards and unsercured debt. 7.5 years later there are two cards with judgements with one collection lawyer for a total of about $10,250.00 less a $1229.32 garnishment from our personal account. We are listed personally and the business on the judgment. I understand the balance of the debt being so old can be taking off the credit report with a letter or so. We have received mixed information on bankruptcy personally and business, after meeting with two lawyers and the accountant. The business paid us $18,600 in wages 2010 and profit of $1197.80 for the year. There are a few assets aquariums and supplies, I clean fish tanks. This allow a flexible schedule to help with my husbands health need.
Laurie Wiedeman
XXX-XXX-XXXX XXX@XXXXXX.XXX
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 5 years ago.

Terry L. :

Hi and thank you for your question. In the future, you can request me to answer any further questions.

Terry L. :

Can you elaborate on your question, I don't really see the question here, but these facts are helpful. thanks

Customer:

Do I need to let the S corp fade away and file personal bankrupcy to protect my cash flow from cleaning aquariums?

Terry L. :

Personal bankruptcy would remove your personal liability for these debts (as well as any personal debts too). If you want, you may be able to close the business as well, liquidating the assets and paying creditors according to your state rules for dissolving S-corps.

Terry L. :

Most of the time an s-corp doesn't need to file BK, although it can.

Customer:

what would be best for improving credit?

Terry L. :

When you do a personal bankruptcy, most debtors can rebound in the first months after the case.

Terry L. :

You can still stay in business, but the business is on the hook for those debts still.

Customer:

Making payment on the debt would take many months. So bankruptcy would be better for us.

Terry L. :

Your personal guarantees don't go away, even when you dissolve the business, so either a ch7 or debt negotiation would be needed to resolve the matter, otherwise they will garnish wages, or freeze your banks as they have already for the judgment

Terry L. :

If you do not have any assets that are not covered by your exemptions, it is often a good way to get back on track.

Terry L. :

I've had clients who file personal bk, dissolve the business, and move on, often starting another business aftewards.

Terry L. :

If the attorneys have said you qualify for the chapter 7, it may be a good way to get back on track.

Terry L. :

If you had an attorney set up the S-corp, talk to them (or your BK attorney) about dissolving the business as well.

Customer:

I was quoted $1500 for personal bankrupcy does that sound in the ball park

Terry L. :

With a business involved, yes, that is very reasonable.

Customer:

Thanks I will call that attorney and start chapter 7

Terry L. :

Ok, I wish you the best of luck, feel free to request me if you have any further questions.

Terry L. :

to wrap up, click the accept button on the screen

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