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Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2870
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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I live in Washington State. I am no longer able to pay my personal

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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.

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

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