Creditor trying to collect business debt during BK13

[BigJohn]

Got a call today from one creditor that claims our bankruptcy doesn't cover the loan we took out for the business and wants us to start making payments. I told the woman she is violation of the court order and claims it does not apply to her.

Any advice on this one or just turn it over to the lawyer if they start sending me notices?

[justbroke]

Turn it over to your lawyer. Business debts are dischargeable if you were a sole proprietorship. I think this person is misinformed, or your business is an LLC or other corporation (other than an S-Corp).

[HHM]

If there is a corporate entity (corporation, LLC, etc), the creditor is able to still continue to collect against the entity. Note, the "co-debtor" stay (section 1301) only applies to "consumer" debt.

[BigJohn]

It is a corporation. We are 'buying back' the value of the business thru the Ch13. So what can we do? Close the business down, notify the court and then start the business up as sole propertitor?

[HHM]

You need to clarify whether the corporate entity is actually liable for the debt. (many times they aren't, simply the owner is liable since it was the owners credit that procured the loan).

[BigJohn]

Thanks. It was my credit that got the loan - next is probably proving that.

[justbroke]

Thanks. It was my credit that got the loan - next is probably proving that.

Next time they call, ask them if this was a personal guarantee. If you are a personal guarantor, then kindly inform them that you are not responsible as the debt was discharged as to you personally.

However, they'll (probably) keep calling the Corporation, looking for money.

You may need to file for the Corporation too. Especially if the Corporation incurred debt, and it's past due.

[larryrose]

HI,
This is exactly what I have been worrying about. I own a LLC and have company credit cards that I am personally signed on. I have always worried about BofA coming after the company for the money after I file ch 13.
The att I talked to today said BofA could sue the LLC once I file. However, the law suite will be for the LLC's EIN. If I was to disolve the LLC and become a sole proprietor or set up another LLC under a different EIN BofA could not come after the new company. It is complicated but a lot depends on the company's assets. She suggested that if BofA did not accept what they could get in a 13 I should talk to a corp att about setting up a new company because he would know what would need to be done to protect any assets from BofA.
Another att also suggested the LLC could work out a settlement.
While the company will still owe this debt as a cosigner I've gotten the impression there are ways to work around this without paying back the full amount. Of course I won't stop worrying until it is done.
Good luck

[BigJohn]

Next time they call, ask them if this was a personal guarantee. If you are a personal guarantor, then kindly inform them that you are not responsible as the debt was discharged as to you personally.

However, they'll (probably) keep calling the Corporation, looking for money.

You may need to file for the Corporation too. Especially if the Corporation incurred debt, and it's past due.

The debt does show up in our bankruptcy proceeding and the bank has confirmed the debt. What they want is payments from the Trustee and expect me to make payments also. Sounds strange to me, like double dipping.

[larryrose]

BigJohn what were you able to find out? Did your call your att?
Thanks

[BigJohn]

I haven't bugged the attorney yet. The bank only called so maybe they were on a fishing expedition. The bank is going to get paid back (partially) by the Trustee. Because the trustee hasn't made any payments yet, the bank probably thinks they can shake me down.

I wonder if I can
1. Start a new business as a Doing Business As (Dba)
2. Close the existing corporation.
3. Take the closed corporation's name and turn it into a Trade Name.
4. Run the DBA under the Trade Name.
Sound feastable?

[larryrose]

I have interviewed 3 att so far. The last one I spoke with seemed to be the most knowledgable about self employed and ch13. However, she is the owner of bk mill and charged $100 for the initial consult if you have a business. In the future she said I could contact her by email if I had questions but I would be dealling with an att based on the first letter of my last name. When I asked about who would be present at the 341 she said it depended on which day I was scheduled. They have 3 att that go to the 341's and they are each assigned a different day of the week.
As for doing a DBA. It is something else for me to look into. It seems once you file 13 the trustee actually owns the assets of the business so I don't see how I could close or change the name without their okay. But this last att seemed to think I could.
I may consult with a corp att before filing.

[BigJohn]

I checked another business that went bankrupt. what they did was start a new business with the same name as the first business and added a II to the name.

[larryrose]

Hi Bigjohn,
Have you heard any more from this creditor?
The creditor I'm worried about is BofA and I'm afraid they won't just let it go because I owe 10k and it looks like my payback will only be about 20% to unsecured. I still haven't filed. I had an appraisal done on my house this week and will get those results monday or tuesday then I will set another app with att. Hopefully will be filed the first week in Aug.
From a self employed point of view will the trustee want an income statement and balance sheet from the last full month or will they want one from the exact date you file?
On the last day of the month I will show more money in the business account because the rent is due on the 1st. Would be nice if they would except the statements as of the 5th when the cash is lower.
Thanks

[DebtEnder]

So the creditor is getting paid via the chap 13 plan and yet they still want more cash?

Sounds to me like they should have not have confirmed the debt as basically they confirmed that after your payments are over this debt is done. Don't know if they would have had to object to the plan as they thought it was a corporate debt, but let's be honest here most small companies don't get credit on their own. It's based on the credit of an individual. As such it makes the debt discharged under personal bankruptcy.

And I agree with your sentiment. It does sound like they are double dipping.