Hi all - new to the forum (although I've been lurking for a while). I need some advice and from what I've seen, you have great advice to give:
In a nutsell: I had a small S corporation that ran a used jet-ski business. Life was good until we had a severe drought and the economy went to tank. Business dried up, debt built up, we went under. I should add that I also work full time (and still do) so I have my primary income - the jet ski business was something that I thought would be a new avenue to get away from IT.
When the business went under I (stupidly) consolidated the debts onto credit cards and a line of credit and started paying them off through my personal funds. I didn't have an accountant - just figured "well, I can pay this off" - it was around $70K worth of debt.
I did that for one year and just couldn't keep it up - I was in the red every month and dipping into personal savings to pay.
Finally, I went back to my lawyer (the one that originally helped me setup the corporation) and asked what my options were. He said - no problem, stop paying on the debt, we'll fire off a few letters stating that you are out of business. They'll sue the corporation, but since you are protected by the S corp, you won't personally be responsible. That was in Nov of 08.
Fast forward to Feb 2008 - the phone is ringing off the hook now for months - the companies (primarily Wells Fargo and BOA) want their money, and both say I have a personal guarantee on the debts. I called my lawyer, he's not really responding, and when he did he said "well, you only asked me to clean up the corporation, you never said anything about your personal situation."
! - I won't get into it all, but I did ask him 50 different ways if I would be personally responsible - he said no.
I've now got a new attorney, she's looked at all the account agreements, etc, and of course I am personally responsible - no bank would give an S corp credit without a personal guarantee! Sigh.
So - on to my questions. I keep reading here that the banks will settle, especially if you say you're filing for Chapt 7. I spoke with WF last week, and they said they'll take 85%. Well, I owe them 31K, so I can't do that. I've done the means test online and think I will qualify, and a quick check by the new lawyer says I will also.
I'm already 3 - 4 months overdue on these debts. All of my other personal stuff (mortgage, car loans, etc) are paid on time with no issues. Credit score is currently 750. I have a good solid income. I just can't pay off these debts - when I add in the payments we can't survive. I have about $8K in the bank (which is $1k lower than it used to be because BOA took money out of my savings account to pay their card - my mistake, I never switched banks - I have now).
Before filing, should I hold off for a while to see if I can get a better settlement? I read somewhere on here that people have gotten as low as 15% with BOA. I can probably pay that off, but how long will that take? Do you think they'll file against me before hand?
Very nervous and looking for some help.
Thanks - Tom
In a nutsell: I had a small S corporation that ran a used jet-ski business. Life was good until we had a severe drought and the economy went to tank. Business dried up, debt built up, we went under. I should add that I also work full time (and still do) so I have my primary income - the jet ski business was something that I thought would be a new avenue to get away from IT.
When the business went under I (stupidly) consolidated the debts onto credit cards and a line of credit and started paying them off through my personal funds. I didn't have an accountant - just figured "well, I can pay this off" - it was around $70K worth of debt.
I did that for one year and just couldn't keep it up - I was in the red every month and dipping into personal savings to pay.
Finally, I went back to my lawyer (the one that originally helped me setup the corporation) and asked what my options were. He said - no problem, stop paying on the debt, we'll fire off a few letters stating that you are out of business. They'll sue the corporation, but since you are protected by the S corp, you won't personally be responsible. That was in Nov of 08.
Fast forward to Feb 2008 - the phone is ringing off the hook now for months - the companies (primarily Wells Fargo and BOA) want their money, and both say I have a personal guarantee on the debts. I called my lawyer, he's not really responding, and when he did he said "well, you only asked me to clean up the corporation, you never said anything about your personal situation."
! - I won't get into it all, but I did ask him 50 different ways if I would be personally responsible - he said no.
I've now got a new attorney, she's looked at all the account agreements, etc, and of course I am personally responsible - no bank would give an S corp credit without a personal guarantee! Sigh.
So - on to my questions. I keep reading here that the banks will settle, especially if you say you're filing for Chapt 7. I spoke with WF last week, and they said they'll take 85%. Well, I owe them 31K, so I can't do that. I've done the means test online and think I will qualify, and a quick check by the new lawyer says I will also.
I'm already 3 - 4 months overdue on these debts. All of my other personal stuff (mortgage, car loans, etc) are paid on time with no issues. Credit score is currently 750. I have a good solid income. I just can't pay off these debts - when I add in the payments we can't survive. I have about $8K in the bank (which is $1k lower than it used to be because BOA took money out of my savings account to pay their card - my mistake, I never switched banks - I have now).
Before filing, should I hold off for a while to see if I can get a better settlement? I read somewhere on here that people have gotten as low as 15% with BOA. I can probably pay that off, but how long will that take? Do you think they'll file against me before hand?
Very nervous and looking for some help.
Thanks - Tom
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