Business Bankruptcy: will a personal bankruptcy need to follow?

[joymal]

I am in the process of dealing with a business chapter 7 filed 2/29/08 for my small business. I had formed a C Corp. and I am the only officer of the company. The company has an SBA loan, a business line of credit and 3 credit cards that were all listed on the bankruptcy case filing (along with several utility companies and individuals). The SBA loan and the business line of credit have "personal guarantees" associated with them. My lawyer and I have held off doing a personal chapter 7 waiting to see how this plays out.

Does anyone have experience with this? We're expecting the banks and credit card companies to come after me on the personal guarantees but I have no clue what to really expect and this is taking an emotional toll on me that I can't really explain. Any words of wisdom from anyone would be appreciated.

My 341 meeting is coming in about 2 weeks.

[blaze]

We are doing the opposite of what you are - We had an LLC go down the tubes and had some business loans secured personally - plus a lot of personal debt. So we did a Ch 7 personally - and were able to include all the business debt on that. The company has not been dissolved but it is not operating. I am wondering if they will require us to do something in regards to it. If you do have business debt secured with your personal assets or your own credit was used to obtain credit they will come after you. That is what drove us to file - they did come after us personally (credit cards) - and had another person sue us in a civil suit! As an LLC we should not have been liable but since we filed before it went to court I don't know what would have happened - At the very least we would have had to hire an attny and go to court to respond or they would have gotten a judgement and could have garnished current wages. Our credit was already ruined so the attny advised us to file a personal 7 and wipe it all out at once. I hope he knows what he's talking about. We had our 341 last week and have not heard anything yet.

[joymal]

The only thing secured in my chain of business debts was a $50k CD securing the SBA loan. The $50k was borrowed money -- borrowed using some of the business line of credit. I didn't secure any of the debt with a house or anything else like that as I was the only person going into this business and I owned a house jointly. The person I owned the house jointly with had no connection to the C Corp. or the business whatsoever.

So I think my case is very different than yours. Good luck to you too!

[CastleKnight]

We had an S-Corp that had copmany c.c's and business loans and lines of credit. We had personally gauranteed the whole lot. Our atty. suggested we just close the business down as all the debt would bounce to us persoany anyway. So we filed chapter 7 jointly. That way we only filed BK once and paid BK atty. fees once. The creditors will look to you personally for any money owed by the company if you secured it personally.We filed Dec.12 Our 941 was Jan 25 and hope to be discharged real soon. Please let me know if I can answer any other questions. We have been in your shoes recently. Good Luck!

[brandj5]

We are doing the opposite of what you are - We had an LLC go down the tubes and had some business loans secured personally - plus a lot of personal debt. So we did a Ch 7 personally - and were able to include all the business debt on that. The company has not been dissolved but it is not operating. I am wondering if they will require us to do something in regards to it. If you do have business debt secured with your personal assets or your own credit was used to obtain credit they will come after you. That is what drove us to file - they did come after us personally (credit cards) - and had another person sue us in a civil suit! As an LLC we should not have been liable but since we filed before it went to court I don't know what would have happened - At the very least we would have had to hire an attny and go to court to respond or they would have gotten a judgement and could have garnished current wages. Our credit was already ruined so the attny advised us to file a personal 7 and wipe it all out at once. I hope he knows what he's talking about. We had our 341 last week and have not heard anything yet.

Blaze, my attorney advised the same thing. I have (had) an LLC that failed, and some creditors had my personal guaranty. The attorney said that filing for personal Ch. 7 will get rid of it.

Although I filed on 3/4/08, I am still getting calls from one creditor. Maybe they didn't pay attention to the bankruptcy notice they received because it didn't have my business name on it. Oh well.

[Dollar Bill]

I have approx $750k that is personally guaranteed biz debt from a c-corp opened in 2000. I personally guaranteed almost all of it. All 6 atty's I consultyed with advised that I file a personally BK. Actually my wife as well because of CA community property....

Many have said save money and do not file for the corp. Simply let it dissolve.

JOYMAL you may want to save the money used for the corp filing and use it for personal C7. If you are married then your spouse may consider filing as well. I see your in Northern Cal.

[blackhole]

I also had an s-corp with personally guaranteed loans. I just filed ch7 personally and listed all my business debts. Some of the business debts were not guaranteed by me, but they were listed anyway to prevent them from ever trying to come after me.

[millerc507]

Are you closing the business?
We had a C-Corp with over $100K of personally guaranteed debt. We closed the business and filed chapter 7. I don't think a business can file chapter 7. We did not file until 1 1/2 after closing and we had stopped making payments for about a year. We tried initially, but it was just too much. We are still awaiting discharge but we had some other really complicated issued that muddied the waters. If the business is closing it should not be a big deal.

[millerc507]

Are you pro se or using an attorney?

[joymal]

We will dissolve the Corp., yes. Effectively I stopped operating the business back in early February. Unfortunately, this is part of a franchise so there are issues with the franchisor wanting to buy the assets and run the location.

And businesses can file Chapter 7.

[Dollar Bill]

MILLER...What other type of hicups are you dealing with? I'm in a similiar situation as my c-corp has over 700k of debt.

[millerc507]

The business was a non-issue b/c it was disolved. Our other hiccups were a loan from my dad for the down payment on our house and lien was not perfected and our crappy atty. did not catch it. Overall, it boiled down to a bad attorney.

[millerc507]

Joymal ... I am just curious. What was the advantage of the business filing Chap. 7 if you were dissolving the Corp and filing a 7 personally? I did see where businesses can file 7 and it got me wondering.

[millerc507]

[joymal]

I'll get clarification from my attorney if I can. I would assume that this just means that nothing will really be discharged completely for me unless and until my personal chapter 7 filing runs its course.