S-Corp and Chapter 7

[anewday]

I have an S-Corp business that is doing, well, very little business now. Do I need to list this on my personal BK? Since the corporation is a seperate entity I wouldnt think I need to. The corporation has no assests and several liabilities that I personally guaranteed. Not sure if I should shut it down before or after I file.

[StartingOver08]

If you have a S Corp that has liablities that you have personally guaranteed, it is best to put all the the liabilities in your BK just as you mentioned.

The S Corp is considered an asset of yours, even if it has no assets.
You can elect to shut it down before or after the filing. It may be a little easier to close it before you file BK. Here is a little information that may guide you in your choice. http://www.moranlaw.net/struggling.htm

My attorney put the S Corp name in the "alias" section under my personal name right on the front page of the petition. There is no doubt that the S Corp debt personally guaranteed by me is discharged now! You might want to do the same thing, ask your attorney. Let me phrase this a little differently: my personal liability for the S Corp debt has been discharge in my BK, but the debt still exists for the S Corp. I had to close it and not do business under that S Corp name any more because a creditor can get a judgment against the S Corp at any time and sieze any bank account that the S Corp has to satisfy the judgment. So to prevent that from occuring, I just closed the corp. I chose to close the S corp rather than file a separate BK for the corporation.

This is something you will want to discuss with your attorney.

[anewday]

Thanks for the info. If my company has been paying the suppliers the last few months will this potentially be a problem since the payments were over $600? I wouldn't think this would affect my personal BK.

If you have a S Corp that has liablities that you have personally guaranteed, it is best to put all the the liabilities in your BK just as you mentioned.

The S Corp is considered an asset of yours, even if it has no assets.
You can elect to shut it down before or after the filing. It may be a little easier to close it before you file BK. Here is a little information that may guide you in your choice. http://www.moranlaw.net/struggling.htm

My attorney put the S Corp name in the "alias" section under my personal name right on the front page of the petition. There is no doubt that the S Corp debt personally guaranteed by me is discharged now! You might want to do the same thing, ask your attorney. Let me phrase this a little differently: my personal liability for the S Corp debt has been discharge in my BK, but the debt still exists for the S Corp. I had to close it and not do business under that S Corp name any more because a creditor can get a judgment against the S Corp at any time and sieze any bank account that the S Corp has to satisfy the judgment. So to prevent that from occuring, I just closed the corp. I chose to close the S corp rather than file a separate BK for the corporation.

This is something you will want to discuss with your attorney.

[StartingOver08]

Actually it does affect your personal BK because the business is wholly owned by you.

This is why you want to get an attorney that is familiar with how the small business affects your personal filing. Not all of the BK attorney's know about the small business aspects. In my personal Ch 7 - the trustee had me furnish all of the business bank accounts, credit cards, expenses and income. I had to give up my A/R's to the Trustee (anything that was due but unpaid as of the filing date). So you want to be very careful when you file.