Personal Debt and Business Debt

[rck3]

I know I need to get with a lawyer, I'm filling out info and getting my data together but I had a question.

We have all our personal debt which is killing us and we will likley fall behind in the next few months. We also own a business (S Corp) which the lawyer said the value is not there to worry about. We do have 2 business credit cards which we put in the company name and EIN but we did have to include our personal info.

If we go through BK, will those business cards be canceled? If so, can we include that debt?

[HHM]

Yes, you can include that debt in your personal Bk. The cards are personally guaranteed anyway so you need to list them regardless.

The issue is this, if you keep the S-Corp alive, the S-Corp. is still responsible for the debt, so the S-Corp must continue to pay. Or, in the alternative, shut down the S-Corp. and start operating as a sole proprietor for a while to kill the business debt and be 100% debt free. (note, there are few hopes to jump through to properly kill the S-Crop without committing fraud on your creditors).

[rck3]

Thanks, sounds like I need to research that aspect more. I figure if I am trying to start over I should be looking at everything. If I do not reorganize and the S Corp is still responsible (which is not a major issue as our personal debit is what is killing us) how does that work? Are we still personally responsible? I mean we are still the account holders.

[HHM]

Thanks, sounds like I need to research that aspect more. I figure if I am trying to start over I should be looking at everything. If I do not reorganize and the S Corp is still responsible (which is not a major issue as our personal debit is what is killing us) how does that work? Are we still personally responsible? I mean we are still the account holders.

If you did not shut down the business, the bankruptcy discharge would protect you personally. So, no, you would not be personally responsible.