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CalAttorney2
CalAttorney2, Attorney
Category: Bankruptcy Law
Satisfied Customers: 10244
Experience:  Civil litigation attorney for individuals and businesses.
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Trying to figure what if any options I have. I'm 55, lost pretty

Customer Question

Trying to figure what if any options I have. I'm 55, lost pretty much everything ($2 million+) in the '08 meltdown. Struggled since to rebuild but it wasn't enough. I do video production as a single-member Connecticut LLC. The LLC owns a '08 Yaris with 200,000 miles and leases a '15 Subaru Forester. It owns what used to be about $150K in equipment that is now obsolete and valueless (and no longer used). In terms of what might have value it owns a four year old video camera that was worth about $5K new, some odds-and-ends of Chinese knock-off equipment (lights, etc) that wouldn't be worth much, a desktop computer, etc. The business has no employees and its only value is my personal services as a video pro to the small client base (they will follow me, not the business, so there's no "business" to sell). The business is $98K in debt to TD Bank via an LOC where TD has a UCC lien against the LLC's assets. TD has just indicated it will no longer renew the line and wants it paid down over 60 months. The LLC also has about $50K in credit card debt (spread across two cards). Several large long-term projects that appeared solid have all fallen apart so the business has no regular monthly income, just a project here and there ranging from $5K to $25K and I don't control when they come in. I own a home with a $258K mortgage. Zillow.com says it's worth $377K but it was damaged by ice storms and has extensive water damage to the ceilings plus other problems; I don't know actual value but it's sure not $377K. I am also in debt about $50K spread across two personal credit cards. In addition to the extremely variable LLC income I also work part-time for a city at about $27/hr for the maximum available time of 29hrs/week. I have healthcare through the city at a deduction of about $35/week. Also a pension deduction of about $37/week. I live with and support a female domestic partner who has significant emotional issues which have prevented her from working (actually she is a lot of what sunk me financially). She is very depressed and although she is not suicidal today I fear that she could become so depending on what happens - she has four pets (ferrets) which are her emotional support. I cannot cover the $2100 mortgage, four credit cards, LOC payments plus costs of living for two on the part time income and every-once-in-awhile video income which could be a gross of $90K+ one year and $18K another year. I have $5K left in the bank and another $10K left in my former $1.4 million investment account. What are my choices? If I Chapter 7 and TD takes everything including my car I lose the part-time income. And I know I can't Chapter 13 an LLC. And I don't have the beginnings of the money to do a Chapter 11.
Submitted: 2 years ago.
Category: Bankruptcy Law
Customer: replied 2 years ago.
Additional point: the business is based in my home. Its most important attribute is an edit room clients can come to, which I custom built into what used to be an in-law apartment. To continue working I would need to keep or replace that space. Otherwise I would lose the LLC income and have only the part-time W2 income.Also: I was just selected to teach a one-semester class at a community college as an adjunct instructor, beginning in September. The additional income isn't enough to fix this problem. If I walk away I destroy my reputation; if I take it on I slightly increase my W2 income but only for one, possibly two semesters while the regular professor is on sabbatical.
Customer: replied 2 years ago.
Last item - by working myself basically to death I have not had a single late payment and continue to have a good credit score (720+/-, brought down only by the amount of debt). But the crash is imminent, because now I have no work booked and no receivables.
Expert:  CalAttorney2 replied 2 years ago.
Dear Customer, I strongly suggest you speak with a local bankruptcy attorney (not because I think you need to declare bankruptcy, but because I think you can use the leverage of a bankruptcy attorney to dissolve your LLC). The assets you have in your LLC are virtually worthless to a large creditor such as TD, and if your debts are set up properly for an LLC (based on the way you have posted them it appears you have), the LLC can safely liquidate, distribute its assets (which are valueless) and you can start over.A bankruptcy attorney is probably the best person to help you negotiate this type of wind down for you - based on what you posted TD wants their money and you need somebody on your side to convince them that the debt is worthless.Relieved of the LLC debts and obligations you can reevaluate your personal debts and hopefully reassess your financial situation. If necessary you can consider a Chapt. 13 (although I recommend this only as a last resort, Chapt. 13 forces debtors into a 5 year repayment plan where all of their "disposable" income is forced into repayment and leaves them with very little for a long period of time).
Customer: replied 2 years ago.
In fact I did consult a local attorney - and will be consulting another. Just looking for perspective. The first attorney seemed to think his job was to scare me out of bankruptcy, and he depicted TD as an especially ruthless lender that takes no prisoners, making the outlook across all fronts amazingly bleak (the lined was opened with Commerce, not TD, but then TD ate them). As to the debts "being set up properly for an LLC," although they are in fact debts of the LLC, every one of them is personally guaranteed. I believe that's pretty common with a single-member LLC, but I don't want to assume anything. Does that change your perspective on this? Certainly if I was able to shed the LLC's TD LOC and two credit cards, I should be able to cope with the two personal credit cards without a Chapter 13. It has also been suggested to me that only a few lawyers have the expertise to handle something this convoluted. Any tips on finding one in the sea of bankruptcy lawyers?
Expert:  CalAttorney2 replied 2 years ago.
Unfortunately, that is pretty common with single member LLCs.That does slightly change the perspective as these debts are going to be considered your personal debts.I still have my concerns regarding the way a Chapt. 13 works (and likely this is what the attorney that was "trying to scare you out of bankruptcy" was raising). But that doesn't mean that a Chapt. 13 is entirely out of the question.You can still liquidate your LLC, and then deal with the LLC's debts, as well as your personal debts, in a Chapt. 13, and renegotiate your loans so that you can better manage your payments. Please do keep in mind - I cannot give you a formal legal opinion or advice on this forum, we are limited to providing "general legal information" you need to work with a local attorney for formal legal advice and counsel. If you are not happy with your current attorney, do speak with another one, you want to be comfortable with your attorney, and confident with their counsel (there are a lot of bankruptcy/debtor's attorneys out there and if you are not happy with the counsel or legal advice you have received, you should speak with another one).
Expert:  CalAttorney2 replied 2 years ago.
You can find local attorneys using the State and local Bar Association directories, or private directories such as www.AVVO.com; www.FindLaw.com; or www.Martindale.com (I personally find www.AVVO.com to be the most user friendly).

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