Hello, and thank you for contacting Just Answer. My name isXXXXX am a bankruptcy law professional, and I look forward to answering your question this evening.
First, unfortunately, there is no a debtor can force a creditor to accept payments of any specific amount. While many creditors will work with a debtor to arrange payments that are affordable to avoid the debtor filing for bankruptcy (in which creditors often get nothing), the more aggressive creditors will inevitably push a debtor in to bankruptcy.
(sorry, I meant there is no way a debtor can force a creditor to accept payments, I missed the "way")
Ultimately, if a creditor wants to be aggressive, they are not obligated under any law to take payments, with the exception of the debtor filing a chapter 13 bankruptcy, which is the form of bankruptcy in which payments are made over a 3-5 year period.
If you were to file a chapter 7 bankruptcy (the type of bankruptcy in which the debt is wiped out quickly, after a bankruptcy trustee seeks to "liquidate" the debtors assets to pay anything they can to the creditors), the issue of small business ownership can be a little tricky, but generally the way that it is handled is that the debtor's ownership interest in the business is what is listed as an asset. Trying to put a dollar amount on "shares" of an S-corp can be difficult, and generally there is little actual value to a small business other than the actual physical assets it has (furniture, tools, etc), so in the alternative this could also be listed as the value of the business. Working with an experienced bankruptcy attorney to list business assets in such a way that they are protected is the prudent course of action. As I said, there are a few ways to list the debtor's ownership interest, either as the value of shares (which is likely small) or the value of the actual assets of the business (which are also likely small). Generally, unless the business is of considerable value outside of the operation of it by the debtor, and the trustee could sell the business or its assets for a significant amount of money, the bankruptcy exemptions available in Florida should be sufficient to protect the business, but again, it is worth using an experienced bankruptcy attorney when filing in order to make sure that the assets are protected.
So, in short, bankruptcy may be the best option to both get past the debt and not lose business assets. There is no way to force a creditor to work with a debtor short of bankruptcy, and this is ultimately what sends a debtor in to bankruptcy, a creditor that is being unreasonable about their demands.
I hope this helps, and let me know if you have any additional questions or need clarification or further detail on anything I have said above (never be afraid to ask for clarification!). If you do not have any additional questions, please remember to RATE my answer so that I can receive credit for my work.
If nothing else, it would be worth sitting down with a bankruptcy attorney to explore your options in more detail (chapter 7 vs chapter 13, how to apply the exemptions to your assets, particularly the $4000 wild card exemption, in order to protect it). Generally bankruptcy attorneys provide a free consultation. For a referral to an attorney in your area of Florida, the state bar association provides a referral service during normal business hours that can be reached by phone at:
Is the $4000 wild card exemption for Businesses value? Its a service business, based out of my home. The only equipment is a few laptops. I just don't want to lose what I've built in the last couple years.
I completely understand. The $4000 is for personal assets, but the anything that could be included in a personal bankruptcy estate should be considered personal assets. The way that business assets are handled is that they are looked at as the debtor's (your) personal stake in the business, making the business itself, or your interest in the business, a personal asset in terms of a personal chapter 7 bankruptcy. How to value the business can get a little tricky, but ultimately if you assign a value to shares, or just use the value of the actual business assets, it is generally not particularly high and covered by the exemptions. Every state has different exemptions, and the Florida wild card is actually a relatively generous one.
As I suggested above, it would be a good idea to have an experienced bankruptcy attorney assist you with the bankruptcy petition just to make sure you are covering all of your bases (or even choosing the bankruptcy chapter that is appropriate, as there are advantages to a chapter 13 if, for some reason, the attorney does not think that the assets will be protected, although based on the information provided, they should be).
However, just based on the information provided, a chapter 7 should not interfere with the operation of a solo business that is a personal services business (and thus has little value on it's own).
I hope that helps further, but let me know if you have any additional questions or need anything else clarified, I am happy to keep chatting. Otherwise, if you do not have any additional questions please remember to RATE my answer so that I can receive credit for my work.
great, one last question, I'm married, if we do file chapter 7, how much in assets can we keep like clothes, car, furniture?
There is also a personal property exemption of up to $1000 for each debtor, and this is generally more than enough to cover furniture, clothes etc, because such things have such a low resale value (unless you are talking about a fur coat or something of significant value).
That is a good question. If you are married and file together, each debtor gets to use each of the bankruptcy exemption. More often than not this covers all personal items. The Florida motor vehicle exemption is $1000 per debtor, so $2000 total if you file together. If there is more equity than that in the vehicle, there is at least a risk of the vehicle being seized, and the risk is proportionate to the amount of equity in the vehicle. The more equity that is unprotected by the motor vehicle exemption, the more likely a bankruptcy trustee will want to seize the vehicle. If there is only a little bit of unprotected equity, generally trustees are not going to take the time or expense of seizing and selling a vehicle for little gain.
great, thank you for all your help. I'll leave you great feedback!
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