too much debt???

[rck3]

So my lawyer has been good so far. Everything on track and we are finalizing the last items today. He makes mention of some business debt, we are personally guaranteed but it will not be discharged. It will be the business debt. He said that he was concerned on how much we were trying to discharge (about $105k) and worried about including this. Why would this be a concern?

[despritfreya]

Your post makes no sense. This tells me you do not have a good understanding of the issues. Go back to your attny and discuss your case again.

1. If your business is a sole proprietorship, the business debt is your debt, every last dime, and, in general, all debts are dischargeable.

2. If your business is a corporation or LLC the debt you personally guaranteed is your debt AND the entity's debt. YOU will be discharged from the debt but the creditor will still be free to go after the entity.

3. If your debts are primarily not consumer debts (51% of total debt is from the business or is business related) you do not have to "qualify" to file a Chapter 7.

Please note, in any bk there are debts that are non-dischargeable such as payroll taxes, sales taxes, other types of excise taxes, income taxes (unless you meet the "test"), student loans (unless you prove a hardship), domestic support obligations, and any debt to which the creditor files a 523 Complaint and wins.

The total amount of debt you have is irrelevant in the context of a Chapter 7, assuming you otherwise qualify for a Chapter 7.

[frogger]

Time to find a new attorney.....

[rck3]

I understood all those issues. It is a S Corp and the debt will continue as business debt but I wanted it included so if the business does go down in the future I would not get stuck with it and not have a BK available. In talked to him more today, he said it was the amount of unsecured debt $180k can raise a flag to the trustee. 45k is student loans, 35k is business. Everything is filed, he said that he wanted me to understand that I was much more likely to get something in the mail from the trustee due to the high amount and migth require alot more paperwork on my past spending.

We shall see, Filed 7/21 as an emergency petition just to get it in before the end of july and then finalized everything 8/5 and finish up monday. Looking forward to a 341 to just be over with that part.

[tcreegan]

not unusual debt

Hi rck3,

Good luck with your filing! I have seen more than a few posts on the forum with your amount of unsecured debt or more. Might be a bit more than your district normally sees, hence your lawyers comment about more documentation.

Hopefully you sail through your 341 !

Tom in Colo

[despritfreya]

In response to:

"In talked to him more today, he said it was the amount of unsecured debt $180k can raise a flag to the trustee".

With all due respect to your attny, my guess is that he has not handled many "business" cases. The amount of your unsecured debt is relatively minor. A personal guarantee on a commerical lease alone could exceed $180k. I am hard pressed to think of any business related 7 where my client owed less than $200k in business related debt and, then, on top of that a ton of non-business related debt.

You are indicating that debts other than business and student loans, total 100K. My guess is that you lived off the credit cards because you were unable to take draws. Such is a typical situation. The only issue you will have is the Trustee making sure you are not "hiding" money in the corporate account and/or determining that your "shares" in the corp have no value.