Should I file personal or business bankruptcy? - Bankruptcy Law Questions and Answers- LawQA.com

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Should I file personal or business bankruptcy?

For past 6 or 7 years our business has operated at a loss. We refinanced our home in 2011 and was able to satisfy the loan on our business property -so we own the business property (building and land)-free and clear. If we file business bankruptcy, will we lose this property? Could we deed this property to a family member prior to filing to protect this property- it is the only thing we own free and clear after 30 years of business. We are currently unable to pay our business credit card and line of credit debts. Since all our business credit cards are guaranteed by business owner do we also have to file personal bankruptcy? Will we be able to keep our home and our car? All our vehicles are in the business name. We also are not current on our 2010 business taxes, but we have filed and paid all previous years, how will this impact our ability to file? We estimate our business debt at about $85,000.

Theodore N. Stapleton, PC
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You raise many questions which depend upon many things, are you incorporated, how much equity is in business property?

Answer Applies to: Georgia
Replied: 11/9/2011

Answer By Kevin Heupel
Heupel Law
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Business debts are complicated especially when you personally guarantee the debts. The best advice is to consult a bankruptcy attorney who specializes with businesses. Until then, do not transfer any property as that will only make matters worse while trying to plan a bankruptcy.

Answer Applies to: Colorado
Replied: 11/4/2011

Answer By Bill Zurinskas
Bankruptcy Law Center
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Everything depends on the type of business entity you operate under. Is the business a corporation, LLC, partnership or sole proprietorship? Talk to an experienced business bankruptcy attorney ASAP. The fact that your business property is free and clear is troubling.

Answer Applies to: Colorado
Replied: 11/4/2011

Answer By Darren Aronow
The Law Office of Darren Aronow, PC
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In todays environment, many of the chapter 7 trustees are going after your equity in the business assets, so you may want to file a chapter 11 to restructure the debt in the business or even a chapter 13 to restructure your debt, if your assets and debts are not too excessive above the chapter 13 limits.

Answer Applies to: New York
Replied: 11/4/2011

Charles R. Nettles - Attorney at Law
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This is a pretty complicated situation. You can keep your home and auto in a bankruptcy presuming that they are yours to keep. If everything is in the business name, then it will be liquidated in a business bankruptcy to pay your creditors. Transferring the property out of your name into a relative's name on the eve of bankruptcy is usually not a good idea. You may sell it for fair market value to anyone you choose but a mere transfer without consideration (an exchange of money or other valuable assets) creates a voidable transaction that could get everyone in trouble and potentially result in the denial of a bankruptcy discharge. You should seek professional advice before doing anything or you may shoot yourself in the foot in regard to the possibility of any bankruptcy relief.

Answer Applies to: Texas
Replied: 11/4/2011

Answer By Harry L Styron
Law Office of Harry L Styron
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The first two issues are whether or not the business is incorporated and whether it can continue to generates an income for you. In either case you will be filing a personal bankruptcy. The analysis of what to do with filing for the business depends on what equity it has it what it owns. As far as you are concerned, because of the guarantees if you cannot pay off all of the debt you are going to have to file personally. If you have a regular income, whether from the business or some other source, you can probably file Chapter 13 and keep everything, by making a repayment plan and paying off everything you owe over 3-5 years. But your situation is quite complex, and you really need to discuss it in detail with a bankruptcy attorney to determine what is the most advantageous course to take.

Answer Applies to: California
Replied: 11/3/2011

Answer By Timothy Canty
Canty Law Firm
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Your situation is too complicated to address in a brief email. I would be happy to give you a free consultation, but here are a few pointers: Do not transfer any property to anyone without consulting with experienced bankruptcy counsel. There are many issues: who owns the business property and how much is it worth? If the business is a corporate entity (as opposed to a sole proprietorship), it is not entitled to a bankruptcy discharge and would be liquidated in a Chapter 7. Whether you can keep your house and cars also depends on how much equity you have. If you file personally and the company has a negative net worth, it would likely survive the bankruptcy. The taxes are not old enough to be dischargeable. But again, don't do anything until you have received good legal advice.

Answer Applies to: Colorado
Replied: 11/3/2011

Answer By Jane Downey
Moore Taylor Law Firm, P.A.
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You need to consult with a bankruptcy attorney. Be sure to pick a certified specialist. You didn't tell me the equity in the business property but the business most likely would lose it in a 7. You should not deed it unless you sell it for market value.

Answer Applies to: South Carolina
Replied: 11/3/2011

Charles Schneider, P.C.
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For past 6 or 7 years our business has operated at a loss. We refinanced our home in 2011 and was able to satisfy the loan on our business property -so we own the business property (building and land)-free and clear. If we file business bankruptcy, will we lose this property? You may depends on its value and who is we. Could we deed this property to a family member prior to filing to protect this property- it is the only thing we own free and clear after 30 years of business. No the Trustee will find out and sue your family member for a fraudulent conveyance and possibly sue you and deny you a discharge of your debts for concealing it. We are currently unable to pay our business credit card and line of credit debts. Since all our business credit cards are guaranteed by business owner do we also have to file personal bankruptcy? Yes. Will we be able to keep our home and our car? Depends on its value and how the property is held. All our vehicles are in the business name.

Answer Applies to: Michigan
Replied: 11/3/2011

Law Offices of Kenrick Young
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If your business debts are guaranteed by you as the business owner, you will likely need to file a personal bankruptcy which would include the business debts. Also, if you intend to keep the cars in the business name, the same would be necessary. Any transfers of property you make to friends and family within 1-year of filing bankruptcy may later be avoided by the trustee as insider transfers, and may also result in criminal charges if the transfers are deemed to have been made with intent to defraud creditors. You should consult an attorney about proper exemption planning to maximize your asset protection as you dissolve the business through bankruptcy.

Answer Applies to: California
Replied: 11/3/2011

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