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cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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LLC bankruptcy protection

Resolved Question:

Is LLC protected from personal chapter 13 bankruptcies by shareholder?

Submitted: 6 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 6 years ago.

1) If an LLC that a Bankruptcy filer has an interest in has no assets and no market value (cannot be sold), that LLC will remain unaffected by a Bankruptcy filing.

2) If the LLC does have valuable assets and/or market value the debtor is the sole owner, those assets and/or the value would become part of the Bankruptcy estate, where they could be a part of the $8,000 wildcard exemption for personal property.

3) If the LLC does have assets and/or market value and there is more than one owner, the entire amount of the assets would be exempt. However, the value of the debtor's share in the LLC would become part of the Bankruptcy estate, and subject to the $8,000 wildcard exemption.

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Customer: replied 6 years ago.

What about my medical business entity: James R Davis MD, LLC. I have tried to sell my previous private medical practices before, and could get nothing for them, because there were virtually no physical assets, and the patients were coming to see me, Dr. XXXXX XXXXX MD, Board Certified Psychiatrist, and wouldn`t probably stay with the practice after I left. Do you think the "Good Will" factor has any value if I declare a Chapter 13 Bankruptcy? Wouldn`t my creditors need to leave my business alone anyway, so that I could spend the next 3 to 5 years working to pay some of my debts off. If they take the practice, I have no way of generating money to repay them.

Expert:  cfortunato replied 6 years ago.

Many businesses have no market value because they cannot operate successfully without the current owner. If your business falls in this category, the Bankruptcy court will not touch it, as it has no value to anyone besides you.

Customer: replied 6 years ago.

I am entering uncharted territory for me. My current attorney is saying that due to the fact that I have averaged $37,000/month over the previous 6 months, I cannot meet the criteria for a Chapter 7 Bankruptcy in Indiana.

Because my home is in foreclosure and I owed 500,000 in secured debt on it, and I owed 1,016,210 in unsecured debt in general at the time I filed for an emergency Chapter 11 bankruptcy stay in order to keep my home from being sold at Sheriff`s Auction on 4/12/11, I do not qualify for a Chapter 13 bankruptcy; leaving me only with the option of filing for a personal Chapter 11 bankruptcy, (usually reserved for small and large business reorganizations,) which he hopes will be approached like a Chapter 13 Bankruptcy by the Bankruptcy Court. Is this correct? Does is matter what my expenses have been in figuring what Bankruptcy Chapter I can elect to file under? I have a an LLC set up for my medical practice, and fan LLC for the horse business I run, (buying, breeding, and selling horses,) off to the same property, (a 20 acre horse farm with a 12 stall barn which the Horse business rents back from me at 3000 per month for 17 of the 20 acres, with 7 fields, and the barn.) Do the LLC`s help protect any of my assets should I eventually convert the 11 to a 7? (The farm equipment, trucks, and 7 horses are owned in the horse business name.)

I am having trouble finding a lawyer who is experienced in doing Chapter 11 personal bankruptcies. Do you have any idea of how to find the right attorney to represent me? Would it be the same lawyer who would represent small businesses in filing for Chapter 11 protection? Or maybe someone with a different set of skills and experience.

Is there a way to get my debts shipped around on paper, so that I would qualify for a Chapter 13 personal bankruptcy?

I need a new vehicle, since I own a 2002 Escalade with 140,000 plus miles on it. Can I buy a 2005 Denali with 90,000 miles, since I was forced to file on 4/12/2011, in order to give my wife and I more time to find a new place to put out horses and for us to live? The expensive home I had with the 20 acres was on the north side of Indianapolis, in Hamilton County, but I am now working full time in the greater Louisville, KY area, at a private psychiatric hospital there. I think that the best thing to do now is to try to lease a property for our horses that my wife and I can also live on. These are, unfortunately very hard to find. Is it better to lease or try to buy a home under my current situation? Especially if it get’s converted to a 7 at some time in the future?

Also, I am 64 years old, and will turn 65 on Sept 14. 2011. What are the rules concerning, a decision I might make to just retire when I turn 65, especially since I had a stent put in a coronary artery in 2003? Could I then just convert to a Chapter 7? Can you elect to convert to a 7 at any time? Is there any other options concerning retirement?

Let`s say that at some time in the next 5 years I did retire and work part time, Would all of the debts be cleared up within a few months, like in a Chapter 7? Are there any rules, concerning waiting 6 months, and then deciding to come back out of retirement, and back to work, concerning the discharge of all of the debt?

Does the trustee or committee of a Personal Chapter 11 Bankruptcy have complete control of how you spend every dime? Of whether you can go on a vacation, for instance? Do you have to ask their permission for every financial thing you do?