How does Chap 13 effect S-Corp

[lrn]

hi
if we have a S-corp, how will the corp be affected by personal bk chapter 13?

[LadyInTheRed]

lrn, I moved your question to a new thread because it is a new topic.

Your interest in an S-Corp is an asset and you must list its value on your BK petition. In a Chap 13, you must either be able to exempt the asset using your state's exemptions or your plan must pay to unsecured creditors at least the non exempt value of the asset. To put it another way, if you have non-exempt assets in a Chap 13, your unsecured creditors must receive at least what they would receive if the non-exempt assets were liquidated in a Chap 7.

Any income you receive from the S-Corp is considered income when determining your plan payment.

Your Chap 13 plan will not allow you to make any investments in the corporation. So, it needs to be able to support itself without you contributing cash or assets.

If you have personally guaranteed any corporate debt, your personal liability for the debt will be discharged, but the corporation's liability will remain. This could cause acceleration of the corporate debt if arrangements satisfactory to the creditor cannot be made to ensure payment of the debt in the event the corporation defaults.

Hopefully, you have observed proper corporate formalities and you have kept the corporate assets separate from your own assets.

[frogger]

Yes. Litr gave you good advice. Start searching the forum and you will find a lot of answers. Then, ask away.