The sheriff arrived today - plot thickens

[catwhisperer]

I need advice and a second opinion so bear with me here:
We FINALLY decided to file Chapter 7 personal and thought it would take care of things - NOT! Today, the sheriff arrived and took an inventory of items to take to auction off for a BUSINESS judgment that is against us. He listed just what would take care of the debt - business, personal, and our LANDLORD's range and refrigerator. It appears they don't care - just take stuff. Said we would have to get something from the landlord that it isn't ours. This has been an education to say the least.
Well, we figure we now need to file Chapter 11 business reorganization - the business should over time be able to take care of itself. The Chapter 7 will get rid of the debt incurred while we thought the business would recover after 9/11.
Thinking it over, if we file Chapter 11 for the business (which is a subchapter S corp), and file personal bankruptcy Chapter 7, the trustee may not think we are trying to hide assets in the business since it isn't in good shape either. This has been the only reason we have hesitated filing personal bankruptcy because the business has a line of credit with a personal guarantee (same reason the sheriff wanted personal assets). If the line of credit bank finds out we were filing chapter 7, they may have called in our loan but if we file Chapter 11 at the same time, we can restructure the business and get rid of the personal debt and start rebuilding everything.

We have until 7/31 before the next judgment hearing for the trailer that was repossessed and the OTHER bank is suing us for the balance due to have the bankruptcy go before another judgment is against us.

Just like the movie "Oh Brother, Where Art thou" - "damn, we're in a tight spot.

[catwhisperer]

Any ideas, PLEASE?

[FilingOnMyOwn]

Did you talk to an attorney? Is there anyone you can consult with? Most of us here on this site just don't know the solutions to such complexity.

[Minnymouth]

IF you have NOT contacted an attorney, you NEED too very quickly and find out what options are available to you regarding bankruptcy and what path you need to take......

DO IT NOW............. before it gets worse.....

Also, most bankruptcy filers on this forum are personal filers..... most do not involve a business......

You need to contact an attorney that deals with personal and business bankruptcy filings........

Let us know what you find out............

We may not be of much help in your situation...........

[catwhisperer]

Thanks, we know we need an attorney - cannot afford one until the end of August. We're thinking about filing a Chapter 11 business reorganization that will stay everything.

[Minnymouth]

You need to go ahead and consult with at least 3 attorneys - NOW - SEE WHAT YOUR UP AGAINST.....

If you wait, have judgements against you already, and they have sent the sheriff to access your assets, your already in deep trouble..

Your items can be seized and sold before you even file bankruptcy.......

Talk to an attorney, get your ducks in a row, filing fees and attorney fees can sometimes be on a payment plan.....

But don't just sit and do nothing right now till the end of August..... may be too late.......

My thoughts......

[no_it_all]

RE: the Chapter 11 idea...not very practical because of the incredible costs that are associated with it. In the entire United States there are maybe 8 or 9 hundred Chapter 11 filers per year. They are almost exclusively larger corporations. Expect to pay thousands and thousands of dollars to an attorney (if you can find one) and plan on a few years of court pleadings.

I read your posts and I am not sure <exactly> what your goals are for the BK. Can you clarify?

[catwhisperer]

Well, I am going to do the Chapter 11 MYSELF or pay less than $2000!!! We had a lawyer once who now sits in jail for attempted murder and was disbarred for messing up on a bankruptcy.
We are only talking a small amount of debts and, frankly, I don't care. I figure that if Susan Polk can defend herself for murder, I can work out a repayment plan. The debts aren't worth the lawyer fees and I have to do something to protect the business - I ain't letting anyone else defend what I can defend best myself. I do need to get an accountant to audit our books but it is a very small business but worth 10 years of work to me and is now able to start repaying it's own debts.

[catwhisperer]

Wow! Now I'm really confused! If the company can pay it's own debts now, then why not let the company pay the judgement against you before they auction your stuff off?

Well, I was just thinking about that. The amount due is about $2500. We cannot pay that much up front but looking at the $1000 filing fee I think we are going to try to scare up the money to pay this vendor and take care of it without the chapter 11. Why pay $1000 and go through the court hell if we can just pay off these vendors. Knowing the vendor, they'd rather set up a payment then take our junk. The company owes a total of $20,000 that we feel we can take care of - just need to negotiate with the suppliers to avoid the chapter 11. Most will work with you - there is one bank with $14000 due that we are paying and they are ok - others are 6 small accounts for $1000-1500.
And THANKS - I was just looking at the Chapter 11 and while I think we can definitely take care of it, why waste time in courts. We'll see.....

[djk]

seems to me the only judgement that could be against the business that would include taking personal property is the creditor that holds the personally vouched line of credit. is that who it is?

[catwhisperer]

seems to me the only judgement that could be against the business that would include taking personal property is the creditor that holds the personally vouched line of credit. is that who it is?

I don't quite understand the question. I found the credit app and we did NOT personally guarantee the purchases. I need about 30 days to get the money to pay them off and prevent business bankruptcy. Any ideas - I am going to have my husband just call them and negotiate to get them to back off so we can pay them. We are filing personal chapter 7 on July 24 so that should stop things a little bit - just until I can scare up the money to pay them off. It would cost us more time and money to file business bankruptcy than to just pay these people off. 5 of the vendors haven't contacted us and may have already written the debt off (2 of which we think are no longer in business).

[no_it_all]

Clearly you are in way, way over your head. Not to put a nice PC spin on it, but I doubt you have the cognitive horsepower to deal with this. The fact that you have judgements flying around you like locusts, sheriffs getting ready to cart off your stove and refrigerator, thought about Chapter 11 (for a 2.5K debt) and got your personal finances tangled up with business finances (despite the protection afforded in a Subchapter S), claiming early on that "I can do a BK myself because I am good at filling out forms" does demonstrate some fatal shortfalls.

You have demonstrated no real strategy in dealing with this, most of your actions have been re-active, not pro-active. That is not to say you are not trying to deal with this, you certainly are, but simply don't really have a clue as to what you need to do. You don't even know who you own money to or if they are still in business. Reacting to judgements is one thing, but being pro-active in preventing them in the first place is the strategy to use.


I think the best advice anyone can give you would to admit that everything is pretty much lost at this point and move on. UNLESS you can find someone to help you much more directly than just an internet forum. The moderators are always talking about seeking counsel and I firmly believe that in this case, that is very, very good advice.

This is in no way, shape or form a personal attact on you, but I simply don't see you doing this yourself...good luck.

[Minnymouth]

No it all,

I have to agree with you on this one................. way too much involved and too much legal aspects..........

[djk]

I don't quite understand the question. I found the credit app and we did NOT personally guarantee the purchases.

maybe I'm confused, what do you mean when you say,
"because the business has a line of credit with a personal guarantee (same reason the sheriff wanted personal assets)" ??

in theory a corporation (even sub-chapter S) is supposed to protect the
individual. I don't understand the deal with the sherriff appearing to
seize property that is not related to the business. The only thing I could
think of is since you stated you gave some kind of personal guarantee for
the line of credit (whhat does that mean anyway?) that the holder of the
line of credit would be the only creditor with reason enough to get a
sherriff to seize personal property instead of business property. You need
to be way more specific about what the heck is going on if you expect to get
any help from a forum.

[catwhisperer]

Yes, you are all right that we are in way over our head. Problem is, it costs WAY too much to hire a lawyer. The lawyer and chapter 11 would cost more than the business debt.

To answer questions, the S corp is now in a position to start repaying it's own debts, just need to hold off the creditors so we can do this. We restructured without filing business bankruptcy - I made my husband go out and get a different job - which he did - and now he is earning enough to take care of personal bills. The business can now bring in enough money to take care of its own debts.

It is all a matter of timing now - if we can get this one judgment collector to back off, which filing Chapter 7 personal bankruptcy will do, we can pay them and then get the other business debtors paid. I need to keep the business - it is foolish to now throw away a business that is finally able to pay for itself and over years will become profitable again - not a dream - it is already happening.

As for the personal guarantees, when you are a Subchapter S, you are incorporated but the bank loan has a personal guarantee on it - this happens too. The judgment we can fight because they never had a personal guarantee - they cannot take personal stuff because the corporation has the loan. If you personally guarantee something, you better believe they can come after you even if it is a corporation. But, the attorneys we did talk to said to include the personal guarantees in the Chapter 7 and they cannot touch it. The S Corp is a small business, just my husband and I - no assets, no employees, no inventory.

Yes, we are in deep but we believe the Personal Chapter 7 and holding off a few business creditors will get us out of the personal problem and keep the business running.

Thanks for your advice - it has helped greatly. Keep the feedback coming.