Can we go Bankrupt??

[pstallone]

Long story, our company, 2 owners has been involved in extensive litigation, and has had to close down.

My Partner has doubled the amount of his mortgage from, $400,000 to $800,000.
We owe about 100,000 in credit cards, we also owe my brother about 180,000. also another 200,000 in unsecured debt against the company, we closed.

The brite spot is we own 2 homes valued at total of $240,000, and we also own land value about $500,000.

If we sold all our real estate we could probably net about $500,000.

If we go bankrupt, I assume our remaining real estate will have to be sold to pay off creditors?

It almost seems better to just stop paying all the credit cards,($3500 per month!!) not pay the unsecured lines, sell the real estate and use the proceeds to try to start our lives over.

If we go BK, I assume the court will mandate that we use the proceeds to pay off existing creditors.

Unfortunately this will leave us with nothing.

What alternatives do we have? BTW, my partner lives in NJ, business was in PA

Paul

[Flamingo]

Long story, our company, 2 owners has been involved in extensive litigation, and has had to close down.

My Partner has doubled the amount of his mortgage from, $400,000 to $800,000.
We owe about 100,000 in credit cards, we also owe my brother about 180,000. also another 200,000 in unsecured debt against the company, we closed.

The brite spot is we own 2 homes valued at total of $240,000, and we also own land value about $500,000.

If we sold all our real estate we could probably net about $500,000.

If we go bankrupt, I assume our remaining real estate will have to be sold to pay off creditors?

It almost seems better to just stop paying all the credit cards,($3500 per month!!) not pay the unsecured lines, sell the real estate and use the proceeds to try to start our lives over.

If we go BK, I assume the court will mandate that we use the proceeds to pay off existing creditors.

Unfortunately this will leave us with nothing.

What alternatives do we have? BTW, my partner lives in NJ, business was in PA

Paul

I am staring at the next to the last paragraph you typed above...."Unfortunately this will leave us with nothing." You already have nothing. Your debts offset your assets. You are insolvent and that is what bankrupt means. When you have business and personal involved in a possible bankruptcy situation, the best thing to do is to get a consultation with an experienced business BK lawyer. Things can get extremely complicated and most of us who post regularly in here will advise you to seek experienced legal counsel in a situation such as yours. If you don't know where to start, call the State Bar Association in your state (it's in the "State" section of your phone book) and ask for some references for experienced and reputable business bankruptcy attorneys in your area.

Best of luck to you...

[pstallone]

Exactly, calculating all we owe including my friends mortgage we owe, 1.3 million.

My friend, wants to keep his house, its worth about $950,000.

He also will continue paying the mortgage, its just all the other debt, thats killing us.

[JRScott]

If you declare bk then yes any property owned by the business would be liquidated to pay creditors.

The type of business is important as well, how was it incorporated?

As said above you need an experienced business bk attorney.

[pstallone]

The business was formed as an LLC.

The properties are not owned bythe business, the 2 homes are owned with his wife, and the land also.

If we go chapter 7, and the properties are sold to pay off existing creditors, we will have nothing.

We are insolvent, total debts are at about 1.3 million. I need to clarify what the courts would require. If the BK court would require we sell the properties, its not worth it, thats all we have. It would better just to stop paying, everything but the mortgage.

BK would be chapter 7

[keepmine]

Sometimes, starting over means you really do start from scratch. While you'll lose equity in the real estate, you'll also lose that debt.
Keeping the real estate from the grasp of creditors will be difficult. For that amount of money, somebody will sue sooner rather than later. Depending on state laws, your property could be leined and a sale forced.
All I can suggest is investigate asset protection strageties. Since you're already insolvent I'm doubtful that'll help much unless, you're willing to sell and then, run far and hide deep for a few years.

http://www.assetprotectionbook.com/

[pstallone]

We would probably net about $500,000 from the sale of the homes and the land.

It really seems like, the best bet is to stop paying, the debts that are killing us. it really seems like going BK, will hurt us more than help.

We need the cash from the homes to rebuild our lives!

We are meeting with an attorney next week.

It seems like going BK, is truly for people who have nothing left?

Paul

[pstallone]

Sometimes, starting over means you really do start from scratch. While you'll lose equity in the real estate, you'll also lose that debt.
Keeping the real estate from the grasp of creditors will be difficult. For that amount of money, somebody will sue sooner rather than later. Depending on state laws, your property could be leined and a sale forced.
All I can suggest is investigate asset protection strageties. Since you're already insolvent I'm doubtful that'll help much unless, you're willing to sell and then, run far and hide deep for a few years.

http://www.assetprotectionbook.com/

If we sell the homes, convert into cash, i'm sure the court could levy our bank accounts. Unless we convert into cash, and keep the money under our mattress.

[AngelinaCatHub]

If we sell the homes, convert into cash, i'm sure the court could levy our bank accounts. Unless we convert into cash, and keep the money under our mattress.

Don't do that. You will have a paper trail and that would be fraud. BK is truly for people who need to start over with a clean start unencumbered by previous debt. It does not mean to start over with a nest egg at the cost of another. Realize what the folks are telling you here. You actually don't have the value of your home as it is a loan by another. There are certain things that you will be allowed to keep. Get the Chapter 7 book from Nolo.com about 17 bucks as a pdf download. An LLC is a limited liability corp. Check the laws and you do need a good lawyer. I wish you well. 'Hub

[Flamingo]

We would probably net about $500,000 from the sale of the homes and the land.

It really seems like, the best bet is to stop paying, the debts that are killing us. it really seems like going BK, will hurt us more than help.

We need the cash from the homes to rebuild our lives!

We are meeting with an attorney next week.

It seems like going BK, is truly for people who have nothing left?

Paul

If you just continue to pay on your house and let your debts go, your creditors will obtain judgments against you which can result in either wage garnishment or liens against your home that in the event you sell your home, the judgments will need to be paid first from the proceeds before title can pass to the new owners.

You need legal advice....quit playing guessing games and when all this is over, learn from it and adjust your lifestyle so it will not occur again. You do realize that you probably have been living for a while way beyond your means - lots of folks don't like to hear that but if they don't adjust their lifestyles after filing, it will all occur again and become a vicious cycle. Credit is a hard habit to break.

Best of luck to you...

[pstallone]

If you just continue to pay on your house and let your debts go, your creditors will obtain judgments against you which can result in either wage garnishment or liens against your home that in the event you sell your home, the judgments will need to be paid first from the proceeds before title can pass to the new owners.

You need legal advice....quit playing guessing games and when all this is over, learn from it and adjust your lifestyle so it will not occur again. You do realize that you probably have been living for a while way beyond your means - lots of folks don't like to hear that but if they don't adjust their lifestyles after filing, it will all occur again and become a vicious cycle. Credit is a hard habit to break.

Best of luck to you...

The debts credit cards and unsecured loans, they can't garnish wages, or place liens against the remaining properties, that are not owned by the business. We are meeting with an attorney next week.


We were certainly not living above our means, legal fees essentially drove us out of business.

[Flamingo]

The debts credit cards and unsecured loans, they can't garnish wages, or place liens against the remaining properties, that are not owned by the business. We are meeting with an attorney next week.


We were certainly not living above our means, legal fees essentially drove us out of business.

In your initial posting, you are talking business and personal debts and they appear intermingled. The business was in PA but you state your partner lives in NJ. PA does not garnish but surrounding states do. So depending what is what in this situation, which an attorney can separate and determine for you, that is where you will have to make your start in determining what you can and cannot do as to your business and personal property and what is protected, what is not.

[AngelinaCatHub]

The debts credit cards and unsecured loans, they can't garnish wages, or place liens against the remaining properties, that are not owned by the business. We are meeting with an attorney next week.


We were certainly not living above our means, legal fees essentially drove us out of business.

[danaf]

Yeah, I'm totally confused by the OP's post. At first I thought this was business debt....then maybe the partner 'we' thing that they were gay and married or something, then I see the partner has a wife. No offense meant - I guess it just threw me that that OP mentioned what was owned personally by each. Either the OP and his partner file bk on their business or if this isn't possible, then they need to file personal bks separately. If this is the case, then the OP needs to take his partner out of the equasion, imo. Very confusing.

[pstallone]

We are not gay "not that theres anything wrong with that."


Ok, we (2 owners owned a company), which we had to close after 11 years.

My partner -co-owner, took out $200,000 in unsecured loans, on the business, he also signed for the loans personally.

He also has personal credit card debt, with his wife about $100,000.

He owns 2 homes investment properties with his wife in his name, and land in his name and his wifes name.

No properties are owned in the company name, the company is essentially busted.

His concern if he went bankrupt, he would have to go personally, since the unsecured loans, and credit cards, are his own.

He also does not want to liquidate the land and the 2 homes he owns to pay off creditors.

The concern is that the court would require him to liquidate the real estate.

He is probably better off selling the real estate and to use the proceeds to start our lives over. We may eventually go bankrupt anyway, but if we wait we can liquidate the real estate and use the cash to start a new business.

If we went Bk now, we lose everything now. If we sell the real estate, we can use the proceeds to try to keep current with the bills, and to re-establish a new business.