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Loren
Loren, Attorney
Category: Estate Law
Satisfied Customers: 29082
Experience:  30 years experience in the practice of estate law.
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I'm going through a divorce this process has greatly

Customer Question

I'm going through a divorce this process has greatly depreciated my funds I'm in debit substancially . I'm considering taking bankruptcy .
Would putting my LLC into a trust protect it from the bankrubtcy I'm the only member in the LLC .
So if I filed personal bankruptcy would the LLC be protected if it was in a trust .
Or should I sign the LLC half over to another individual making them fifty percent owner of the LLC .
Would that protect it ??
Submitted: 9 months ago.
Category: Estate Law
Expert:  Loren replied 9 months ago.

Good day. I am Loren, a licensed attorney, and I look forward to assisting you.

Customer: replied 9 months ago.
Thank you
Customer: replied 9 months ago.
What's the best way to protect the LLC in a personal bankruptcy
Customer: replied 9 months ago.
Trust or giving half of LLC to another party ?
Expert:  Loren replied 9 months ago.

A revocable trust provides no protection from creditor claims since the assets remain in your control.

Signing half the assets over to a third party would not work either since the bankruptcy trustee can void the transfer as a transfer in contemplation of bankruptcy for the purpose of defrauding creditors.

Expert:  Loren replied 9 months ago.

While the assets are protected if the are held in an LLC, your LLC interest is subject to a charging order or attachment by creditors.

Expert:  Loren replied 9 months ago.

Frankly, protecting nonexempt assets in personal bankruptcy is very difficult, but the list of exempt assets can be quite extensive and can cover homestead, personal property used for work, cars, etc.

Customer: replied 9 months ago.
These are properties I had to buy from her . So theirs a bank mortgage on them all they hold the Deed of trust
Expert:  Loren replied 9 months ago.

As secured creditors then they will be entitled to foreclose on the collateral.

Customer: replied 9 months ago.
The bankruptcy would be on credit cards I had to use to pay bills etc . During this process . I can't work I'm long term disabled
Expert:  Loren replied 9 months ago.

The bankruptcy would affect all assets.

Customer: replied 9 months ago.
I'm going to continue to pay on the bank note that holds the deeds to the properties they wouldn't be included in the bankruptcy
Expert:  Loren replied 9 months ago.

If you can not work you would only qualify for chapter 7, which is a liquidation, not a reorganization.

Expert:  Loren replied 9 months ago.

You would likely be in default of the note by filing bankruptcy, even without scheduling the debt.

Customer: replied 9 months ago.
what's your suggestion ? The bank holds the deeds to the properties and their all in the LLC
Customer: replied 9 months ago.
I'm gonna continue to pay the note on the properties in the LLC
Expert:  Loren replied 9 months ago.

Talk to the credit card companies first and see if you can arrange for some sort of relief from them without filing for bankruptcy. They may allow interest only payments or some other sort of forbearance to assist you and keep you out of bankruptcy.

Customer: replied 9 months ago.
Okay I will . But if I decide to go bankruptcy would the LLC and properties be at any risk if the bank holds the deeds ?
Expert:  Loren replied 9 months ago.

Probably not, though the LLC membership interests (not the properties themselves) may have to be scheduled as assets.

Customer: replied 9 months ago.
Okay thank you
Expert:  Loren replied 9 months ago.

You are very welcome. If you have no further questions, and have not yet done so, please remember to leave a favorable rating (Excellent or Good) so that I am credited for assisting you. A bonus is not required, but is always appreciated.

Expert:  Loren replied 9 months ago.

If you have no further questions please remember to rate my service so that I am credited by JA for answering your question and also so that I may close the question. Thanks.

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