Newbie- Thinking about filing for BK

[centroid]

Hi, I'm new to the forum. I have a small business that is an S-corp. I have $45k in debt all with one bank, one line of credit and one CC. I'm about 45 days past due. The line of credit has a personal guarantee.

I've been thinking about filing and have talked to a lawyer about it.

I asked my lawyer about the asset transfer time and he said at least 90 days for the look back time. I'm reading a book on BK printed in 2008 and it said the trustee look back 2 years.

The second issue is I want to continue my business after I file for BK since it my only source of income. My lawyer said I only need to file for personal BK. Since I own 100% of the shares of the business, all debts of the business will be gone. I would love to hear other opinions about it.

I'm trying to figure out what to believe. I would like to get some feedback on this. Thanks.

[frogger]

Did you transfer or sell property? Was it an "arms-length" transaction or not? How long ago did you transfer the property?

And.....

My lawyer said I only need to file for personal BK. Since I own 100% of the shares of the business, all debts of the business will be gone.

Be looking for a new lawyer.

[centroid]

I did transfer a second home to my brother about 8 months ago. I'm not sure what an arm's length transaction is.

Can you elaborate on the quote that you've selected and why I should look for a new lawyer ?

Thanks.

[daylate]

As to why you should look for a new attorney-If you have an LLC that has debt, creditors can go after the assets of the LLC even though your personal liability is wiped out. Depending on how the debt was accumulated, how much the LLC has in assets and if it generates income you could have problems. Now if it is without assets and doesn't generate income you might be ok. But it seems that checking with another attorney is the right thing to do.

Arms length transaction- is one that would be one that would be done the same if it wasn't done with your brother. For example you could sell your house for 200k but gave it to your brother for 20k-not an arms length transaction. If you sold for 200k it would seem to me to qualify.

[frogger]

Daylate summed it up pretty good above. It appears that your attorney is not familiar with a bk involving an LLC, so do yourself a favor and find one that is. That will save you a lot of grief in the future.

As to the house transfer to your brother..... the transfer will not be a problem provided that you were compensated fair market value. Anytime however that family is involved, the trustee will look more closely at the transaction.

Good luck!

[tcreegan]

Hi centriod,

...I agree w/ the other posters, time to shop around for an attorney. Find someone who is a "good fit" for you and your case. Need someone who has filed a number of business + personal BKs

Generally the 90 day lookback is for unsecured credit purchases. This is from the Statement of Fin. Affairs document filed in a Ch 7

a. List all other property, other than property transferred in the ordinary course of the business or financial affairs of
the debtor, transferred either absolutely or as security within two years immediately preceding the commencement of
this case.

There is the possibility of filing both a business and personal BK, there are issues w/ continuing business operations while in the BK that have to be worked out w/ the trustee, S-corp vs LLC issues, lots of good stuff to ask during consultations while interviewing attorneys!

Good luck to you on this, hope it can all get worked out,

Tom in Colo

ps: speaking of BK books, did you see the NOLO book? www.nolo.com

[centroid]

Hi, I wanted to clarify that I'm not an LLC. My business is an S-corp. I don't know if that makes a difference.

For the property, it was a quit claim deed, individual to individual. Again, I'm not totally familiar with that but no money was exchanged. Its starting to sound like I've shouldn't have done that or else wait 2 years to be totally clear of any lookback issue. The transfer would be a year the end of Feb 2011. So I should not consider filing for another year.

All of this is so stressful. Some of you have gone through this !! I can't believe it.

[centroid]

By the way, what are the three color bars on the left ?

[tcreegan]

....still haven't figures out the color bars...

For the property, it was a quit claim deed, individual to individual.

...in BK world, family to family is different from individual to individual. Family & friends = "insiders"

...but no money was exchanged

Ouch, unfortunately this makes it worse...an insider transaction for "fair market value" is OK as long as it is disclosed.

Keep looking for that good attorney,

Tom in Colo

[frogger]

Keep looking for that attorney, and you need to get more time in before you even consider filing. As to the corporation status, LLC v S-Corp, it's not going to matter. It's still a corporation.

[centroid]

Would another this option be better to deal with the debt. I allow the two accounts to go into collection and deal a pay off amount, get a 1099, and try to deal with it ?

I'm reading more on the other topics regarding Property Transfers & Gift and I'm seeing people talk about a 4 year look back time. Something about a "fraudulent conveyance statue".

I'm checking out a new lawyer and she said the initial consultation is $200. Is that typical ?

[scorpion35]

I did transfer a second home to my brother about 8 months ago. I'm not sure what an arm's length transaction is.

Can you elaborate on the quote that you've selected and why I should look for a new lawyer ?

Thanks.

boy oh boy if u file the trustee is going to want that house back