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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Legal
Satisfied Customers: 41221
Experience:  Multiple jurisdictions, specialize in business/contract disputes, estate creation and administration.
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I hold a 5% interest in a Florida LLC. I am preparing to file

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I hold a 5% interest in a Florida LLC. I am preparing to file a Chapter 7 in Georgia. How will my ownership be treated and can I sell or transfer my interest? If I do not declare my interest, what happens? This is my only asset. Will it be treated and valued according to my true ownership of 5%? I have many creditors and I already have at least one judgement against me personally with a couple of individual lawsuits coming down the pike.

Thank you for your question. Please permit me to assist you this morning. To ensure that I do not miss anything, I will go lne by line with my response.

You posted:

I hold a 5% interest in a Florida LLC. I am preparing to file a Chapter 7 in Georgia. How will my ownership be treated and can I sell or transfer my interest?

Your ownership is an asset and will be used to pay down your debts. The trustee is permitted to sell the interest to third parties as a means to partially recoup the debts owed to your creditors. Prior to declaring bankruptcy you can sell or transfer your interest, but once you declare any sale or transfer would need to be approved by the trustee, and the proceeds likewise collected by the trustee so as to be utilized to pay down the creditors with strongest and most senior liens.

 

If I do not declare my interest, what happens?

A few options. If the asset is found, bankruptcy petition can be denied based on misrepresentation and fraud, as you would have failed to fully and adequately report your assets. Otherwise as this asset is not part of the petition, it is not exempt from being pursued by creditors, so while you may end up discharging some debts, those debts that weren't discharged could still go after this asset directly.

 

This is my only asset. Will it be treated and valued according to my true ownership of 5%?

Yes, it would. The whole company would be evaluated and your interest would be calculated in proportion to your ownership.

 

I have many creditors and I already have at least one judgement against me personally with a couple of individual lawsuits coming down the pike.

I am sorry to hear that, truly. Hopefully BK would get those present and future judgments discharged, but I honestly do not see the means to protect this interest if you will be filing fairly soon. This asset becomes reportable to the courts and could be used by the trustee to pay for some of the debts owed.

 

Good luck.

Customer: replied 4 years ago.
The assets of the LLC ARE AS FOLLOWS
1. VACANT RESIDENTIAL HOME VALUED AT $31K
2. NOTE FROM SALE OF PROPERTY IN 2011 WITH BALANCE OF 12K.
3. BROKERAGE ACCOUNT VALUED AT 16K
TOTAL VALUE OF LLC $59K
DOES THIS MEAN THAT MY ASSET VALUE WOULD BE 5% OF 59K?
IF SO, MY EXPOSURE HERE WOULD BE AROUND $2,950.00.
IS THIS CORRECT AND IF SO, HOW WOULD THIS BE HANDLED BY THE TRUSTEE SINCE WE HAVE SOME PROPERTY AND SOME CASH?
THANK YOU FOR YOUR HELP.

Thank you for your follow-up, Carl. I would be happy to help you further.

If the assets are valued as you said, your asset exposure would indeed be that amount. It may be possible for you to keep that asset (if that is all you have) by claiming it as an exempt asset. You could potentially use the 'wildcard' exemption if you do not have a homestead as a means of requesting that this asset not be pursued. You would still need to disclose it in your petition, but you would be able to protect it. Here is an excellent list of what potential exemptions may exist, and what you can use to save some of your assets form being pursued:

http://www.exemptions.diydbankruptcy.com/Exemptions/georgia.aspx

Good luck.

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