How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Terry L. Your Own Question

Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2447
Experience:  Better Business Bur 15yrs bankruptcy experience. Chicago Bar
Type Your Bankruptcy Law Question Here...
Terry L. is online now
A new question is answered every 9 seconds

I live in Washington State. I am no longer able to pay my personal

Resolved Question:

I live in Washington State. I am no longer able to pay my personal credit card charges. As my business has failed, my business credit card companies have attempted to obtain payment from me personally (though I didn't sign a personal liability agreement)...I don't know whether those attempts are by a "stated or contract" debt collector. They have not made any attempt to sue my business.

I have no job now and my home & assets would seem to be covered by homestead protections.

My question involves the prospect of a settlement with my personal credit card companies. Given that bankruptcy would yield them nothing is it likely that they would accept a reduced balance offer...some blogs suggest as little as 25%?

I understand that my personal cards are one thing. It seems that if the business card companies can't prove that I am personally responsible for the debt then the issue can be resolved exclusively via my soon to be out-of-business business. However, if there is any prospect of those debts actually flowing to me personally that could complicate any settlement with my personal cards.

My question is ultimately whether I should simply try to negotiate the simple settlement with ALL of them? I don't understand the tax implications for me if I assume my companies debts.
Submitted: 9 months ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 9 months ago.

Terry L. :

Hi, thanks for your question. You should hire a lawyer for specific legal advice. No attorney client relationship is created here.

Terry L. :

You can try to settle with whomever you wish. You should request that the business debts prove that there is personal liability first. If you had incorporated or had an LLC, and didn't sign any personal guarantees, then you shouldn't be liable for those debts if the business is dissolved.

Terry L. :

Settlements are taxable, you are taxed as if the savings was income to you.

Terry L. :

Talk to your tax advisor about implications regarding settlements.

Terry L. :

The creditors do often take a percentage, especially with the possibility of bankruptcy

Terry L. :

that is correct

Terry L. :

what percent, is the magic question.

Terry L. :

They may want a budget worksheet to verify information before they agree.

Terry L. :

Let me know if you have any other questions.

Terry L. :

Thanks

Terry L. :

Terry

Customer:

Thanks Terry,

Customer:

What might the budget worksheet look like? It would be pretty simple to produce a spreadsheet outlining my outstanding debts and my inability to pay. I'll have to ask my accountant about the relief of debt on my business cards...who gets the "income" if I settle with them personally. In otherwords, if I'm paying my company's debt, do those savings become income to me or the company.

Terry L. :

That can vary with the creditor. they may want to verify assets and income and expenses before they agree to a settlement

Terry L. :

If the bank settles on a business debt, it would depend on if the business is still filing taxes, etc. if so, income/debt could pass thru to you on a K1 statement etc.

Terry L. :

Your accountant should be able to sort that out for you

Terry L. :


Did you have any followup questions? if not, please click accept to close the question







thanks






Terry


Customer:

So sorry for my delay in responding...got

Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2447
Experience: Better Business Bur 15yrs bankruptcy experience. Chicago Bar
Terry L. and other Bankruptcy Law Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
< Last | Next >
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
  • My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer. Eric Redwood City, CA
  • I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight. Michael Wichita, KS
  • PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent. Three H. Houston, TX
  • Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!! Elaine Atlanta, GA
  • It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem. Tony Apopka, FL
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
 
 
 

Meet The Experts:

 
 
 
  • FiveStarLaw's Avatar

    FiveStarLaw

    Attorney

    Satisfied Customers:

    3203
    Bankruptcy Lawyer. Experienced.
< Last | Next >
  • http://ww2.justanswer.com/uploads/FL/FLAandNYLawyer/2012-1-27_14349_3Fotolia25855429M.64x64.jpg FiveStarLaw's Avatar

    FiveStarLaw

    Attorney

    Satisfied Customers:

    3203
    Bankruptcy Lawyer. Experienced.
  • http://ww2.justanswer.com/uploads/TL/tleeders/2012-6-13_204815_TSL1.64x64.jpg Terry L.'s Avatar

    Terry L.

    Attorney

    Satisfied Customers:

    2204
    Better Business Bur 15yrs bankruptcy experience. Chicago Bar
  • http://ww2.justanswer.com/uploads/mnphillips2/2009-03-13_203105_10984459-249293407.jpeg Phillips Esq.'s Avatar

    Phillips Esq.

    Attorney-at-Law

    Satisfied Customers:

    950
    B.A.; M.B.A.; J.D.
  • http://ww2.justanswer.com/uploads/CO/cortrightlaw/2011-12-5_4117_Kevin.64x64.JPG cortrightlaw's Avatar

    cortrightlaw

    Attorney

    Satisfied Customers:

    490
    Attorney practicing Bankruptcy Law including Chapter 7, Chapter 11, Chapter 12, and Chapter 13.
  • http://ww2.justanswer.com/uploads/Jay1968/2006-12-03_004423_JoeRossPhoto.jpg JoeLawyer's Avatar

    JoeLawyer

    Attorney

    Satisfied Customers:

    376
    Attorney in the practice of Bankruptcy Law since 1996
  • http://ww2.justanswer.com/uploads/DY/Dylatess/2012-9-11_1968_BHBTemplePhoto.64x64.jpg dylatess's Avatar

    dylatess

    Attorney

    Satisfied Customers:

    370
    35 plus years of experience specializing in bankruptcy law
  • http://ww2.justanswer.com/uploads/US/USLawAnswers/2012-9-20_23143_20090105211638Headshot3b.64x64.jpg Brent Blanchard's Avatar

    Brent Blanchard

    Bankruptcy Attorney

    Satisfied Customers:

    315
    Twelve years experience in all aspects of debtor & creditor BK.