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If I own 100% of an C-Corp and have personally guaranteed the

Customer Question
debts of the corp, can...
If I own 100% of an C-Corp and have personally guaranteed the debts of the corp, can I go Chapter 11 for the corp and not take personal bankruptcy?
Submitted: 5 years ago.Category: Bankruptcy Law
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Answered in 6 minutes by:
5/3/2012
Bankruptcy Lawyer: cfortunato, Attorney replied 5 years ago
cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8,023
Experience: Bankruptcy professor.
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Hi JACustomer,
Is this bank your only creditor or your main creditor?
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Customer reply replied 5 years ago
Only Corp Creditor. Have personal debt and have been paying Corp bills with personal funds
Bankruptcy Lawyer: cfortunato, Attorney replied 5 years ago

Then filing a Chapter 11 for your corporation will probably not help you, as a majority of your creditors must approve your re-organization plan. If this bank is your only corporate creditor, that bank must approve your re-organization plan. If the bank will not work with you now, there is no reason to expect that they will work with you if you file a corporate Bankruptcy - as they do not have to work with you because you file a Bankruptcy.

 

I think this is what you wanted to know. If not, please let me know.
Thank you.

cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8,023
Experience: Bankruptcy professor.
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cfortunato and 87 other Bankruptcy Law Specialists are ready to help you
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Customer reply replied 5 years ago

I am not trying to get out of paying my debt, I just do not have the same cash flow as in the past and need to reduce my payments. I tried to move the loan but can not.

If I can not make the payments, what are my options?

 

Bankruptcy Lawyer: cfortunato, Attorney replied 5 years ago
Does your corporation own significant assets that can be sold?
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Customer reply replied 5 years ago
We own no assets. we are a professional services company and have no accounts receivable, inventory. We get paid a commission or consultnat fee when we complete our work. Auto, computers etc are all personally owned and have very little value.
Bankruptcy Lawyer: cfortunato, Attorney replied 5 years ago

Then if the debt is not paid, there is nothing the bank can do to the corporation.

If you file a personal Bankruptcy, then there will also be nothing they can do to you personally. If the bank will not work with you, filing a personal Bankruptcy would be the only way to protect yourself.

Perhaps if you explain this to the bank, they will be more likely to work with you.

 

 

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Customer reply replied 5 years ago
Thank you for your quick responses!
Bankruptcy Lawyer: cfortunato, Attorney replied 5 years ago
You're welcome! And thank you for accepting my answer!
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cfortunato
cfortunato
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