Large secured business debt

[kondi]

I have 625K in secured debt as an SBA loan. My business failed due to fraud and gross inflation of revenues by the person I bought it from. The bank is entering a judgement against me next week for 625K. I have two other small business loans which I have been paying from personal account but cannot anymore. No consumer debt. There is no equity in my home since its market value dropped. My current job just covers my mortgage and other living expenses and nothing to spare. I have a lawsuit against the person who defrauded me, it is one year old and the findings are favorable to me; however it will take another year to go to trial, no settlement in horizon and I ran out of money to pay for it. What is my best option???
Thank you

[lrprn]

IWhat is my best option???

Sorry to hear about all your troubles, kondi. Was your business an LLC or some other type of corporation?

Start by making appointments for free or low-cost initial appointments with 3-4 bankruptcy lawyers experienced working with a business Ch 7. You may have to look hard to find that but that is precisely what you need. Do as much research on your own about business Ch 7 filings, then go on your consultation visits with a list of questions and write down the answers.

Hopefully you'll find a lawyer that you feel will do a great job representing you. You'll also learn a tremendous amount about what choices will give you the best financial outcomes in the long run.

Glad you found us - welcome! Keep posting questions - we'll help you sort things out as best we can.

[kondi]

Thanks. I just met with two BK lawyers who both suggested that I file chapter 7 for myself since I secured the debt personally and move on. Chapter 7 applies to me since my debt is business and not consumer. The other option is to receive the judgements and see what happens later.
Regarding my personal credit, it is now excellent. But not for long, since it will be ruined by the upcoming judgements, or by chapter 7. If I file chapter 7 first no judgement will appear on my record, just excellent record and then the sudden BK - I don't know if there is advantage to this vs judgements, defaults, etc. and then ultimately BK.

[epiphany]

Thanks. I just met with two BK lawyers who both suggested that I file chapter 7 for myself since I secured the debt personally and move on. Chapter 7 applies to me since my debt is business and not consumer. The other option is to receive the judgements and see what happens later.
Regarding my personal credit, it is now excellent. But not for long, since it will be ruined by the upcoming judgements, or by chapter 7. If I file chapter 7 first no judgement will appear on my record, just excellent record and then the sudden BK - I don't know if there is advantage to this vs judgements, defaults, etc. and then ultimately BK.

Um, do you mean chapter 11 maybe? I don't know much about chapter 11 but Chapter 7 is the simplest form of consumer BK.

Is there such a thing as chapter 7 business BK anyone?

ep

[soleprop]

Is there such a thing as chapter 7 business BK anyone?

ep

yes, there is . provided you are not a corporation.

[epiphany]

yes, there is . provided you are not a corporation.

Ah, thanks. I am a sole proprietor of a very small business but also employed full time. I was confused by the OP's statement that said that chapter 7 applied to him since it was business and not consumer--still not sure what that means.

ep

[soleprop]

i'm new to the whole bk thing, so obviously new to the CH7 business debt filing. but apparently if you're a small business / sole proprietor, and your debts are primarily business (50% or more) instead of consumer, you file CH7 and only need to indicate this on the means test (the rest of the test does not apply). apparently it's the rest of the schedules (which i'm in the middle of so i don't know much about them either) that prove the primarily business CH7 filing for the trustee.

a quote from lrprn in another thread:

Here are two excellent webpages that deal with businesses that are considering filing Ch 7 -

http://moranlaw.net/struggling.htm

http://www.************************/...ease/#more-690

We have several small business owner forum members who have filed recently.

[epiphany]

Haven't read the links yet (but I will) but gotcha...think I know what you mean.

Thanks,
Appreciate it.

ep

[kondi]

Thanks all.
Yes I can file chapter 7 since my debt is business, not consumer.

I ran out of personal money to fund the lawsuit anyway. You're right if I file chapter 7 the lawsuit becomes a bank asset. If they pursue it that fine. If they drop it my lawyer told me I have the right to pick it up and perhaps fund it on contingency if that's possible. I have also a line of credit (60K) from a different bank besides the 625K which I stopped paying for it too (I paid the min from my personal account for over a year).
The bottom line is that I have been fighting to avoid bankruptcy for over a year (after the business failed) and used up all my personal funds to pay the banks and the lawyers for the lawsuit (BTW, the lawsuit is soley to recover money for the bank and even if I win or settle there is no chance that I'll personally get anything and that is assuming we can collect). Interestingly, my credit report is excellent now since it does not show my business debt, but not for long with the judgements coming. Two bankruptcy lawyers told me that they cannot see how I can get out of this without bankruptcy, unless I don't mind wage garnishment and getting my employer in the mess, continue living in a limbo and distress (which has had its tolls on my family) and ultimately file. The irony is that the bank and its lawyers agree that I'm a vicitim of fraud and that I have been trying to recover their money through the lawsuit. But since it is an SBA loan they are not interested in working with me anymore since they are guaranteed refund from the SBA if they demostrate to the SBA that they went after me on all fronts (seize assest, garnish wages ,etc.)