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cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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Heres my problem...My debt, mostly credit card is around $50,000,

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Here's my problem...My debt, mostly credit card is around $50,000, I have a 2nd mortagage on my home, house payment is $540 monthly, I still have excellent credit, have an interest in a small business that's not doing very well either. I have to keep my home, as I live alone, am 52, and I'm the breadwinner. I couldn't find a rental as cheap as my house payment is, plus utilities. My car is paid for and runs fine. My only son is grown and gone. I hate to mess up my good name, but I have health issues, which will likely prevent me from working up to retirement age. I may have to go on disability before then. What are my options? I am laid off from the business right now, as they cannot afford to pay me, and I'm looking for work elsewhere, but I do not want to involve my personal finances with the companies, even though one of those credit cards is from the companies expenses (about $15,000)
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 7 years ago.

Hi JACustomer,

There is no question that Bankruptcy is usually the best choice for someone who is struggling to pay their debts. The question that does remain is whether or not that person qualifies to file a Bankruptcy (this depends mainly on one's income), and what - if anything - that person would have to give up if he or she files.

In Ohio a Bankruptcy filer is able to keep a home with equity of $20,200 (plus about 5%), and a car with equity of $3,225 (plus the cost to sell the car).

Customer: replied 7 years ago.
You mention the income and assests....I have furniture, etc in my home, which by the way, I did not put on those cards, but paid for all that stuff 1 yr same as cash. My income right now is unemployment, and as far as equity, I think I have under 20 in my home right now. You keep saying in Ohio, but I live in KY, and you don't mention the business I own part of at all? What part would that play in a bankrupcy if I did it? The business is not making money right now and is really struggling to stay afloat. We don't own the property, but are buying it, with several years left to pay on that. The roof is leaking and the parking lot is terrible. There's alot to do for the property and our taxes are late for the state right now. They've been able to pay the monthly sales tax and payroll taxes and some of the property taxes, but still behind some....There's no money there either. What about the business?
Expert:  cfortunato replied 7 years ago.

What is the equity in the business property?

Does the business have a market value? (Could it continue to run if it was sold - without you to run it?) If so, what is the market value of the business?

Customer: replied 7 years ago.

I own 51% and my father owns 49%. Since my lay-off, my son and a longtime salesman (10 years) are running it, along with one other employee. Could the business run without me overseeing what goes on long term.....No, probably not. My dad has pretty much retired at this point and is gone alot. I have no idea what market value the business has: we have some inventory, but not near as much as a few years ago, lots of used stuff that's not ready for sale, so it's worthless right now, our building, which needs a new roof and our parking lot is shot. We bought the bldg for $325,000 several years ago, and borrowed about $45,000 for a bldg repair that we had to make last year. The guy we're buying the bldg from loaned us that money and we'll pay it back along with the loan. We have several years left to pay on the bldg loan, like 7-10, I think.....

Like I said before, we're having trouble paying the taxes this year, as our sales are approx 1/2 of what they were two years ago.

Expert:  cfortunato replied 7 years ago.

If you file a Bankruptcy, you would be able to keep your furniture, unless it is extraordinarily valuable.

If the business has no market value, you would also be able to keep that, and it would overall have no affect on the Bankruptcy. Additionally, since there is no equity in the building the business owns, that will also be unaffected.

If you are receiving unemployment, you would be eligible to file.

Customer: replied 7 years ago.
You say if the business had no market value, but it would, does have some value...I don't know what it is, but the actual business, there is inventory that if closed, would be auctioned off, and the bldg is valued at right around $325,000, which is what we paid for it, and of course are still paying on. Only now, the roof's shot and the parking lot is also shot. Why would a personal bankrupcy affect anything to do with my business? Aren't they separate? In your opinion, should I just go ahead and do this or just keep plugging along, knowing I will never pay off this debt? Because at the rate I'm going, I never will. It's just not even possible.....and physically I don't think I can make it to retirement age, although I want to try and am trying. Alot of this debt came from a short marriage I got into and out of in 2000, and I've been paying ever since. Before that, my debt load wasn't too bad and I was able to handle it. What should I do?
Expert:  cfortunato replied 7 years ago.

With a Bankruptcy filing, all assets of the debtor are taken into account, including the value of the debtor's share of a business. If your share of the business - including any value in the building the business owns, has a market value - if your share can be sold - that portion of the business (your share that can be sold) becomes part of the Bankruptcy estate, and the Bankruptcy trustee can sell your share if he thinks it worthwhile to do so. If your share cannot be sold - especially if you are needed to run the business - or can only be sold for a small amount, the Bankruptcy trustee will not be interested in your business.
I can only provide legal information, not legal advice, so I cannot suggest to you what you should do, but if it were me, I would go ahead and file.

Call the Kentucky Bar Association for a recommendation for a Bankruptcy attorney, and don't be afraid to "shop around", because there is a large variation in what Bankruptcy attorneys charge, (I have seen them charge $800 - $3000 for the same service), and a higher price does not mean a better attorney. The number for the Bar is (502)(NNN) NNN-NNNN
Most Bankruptcy attorneys will give a free or low-cost initial consultation. Go to a few to get a better idea of what is involved.

Edited by cfortunato on 9/3/2010 at 7:30 PM EST
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