TTINC Posted April 27, 2005 Report Posted April 27, 2005 If I file a personal no asset Ch.7 does that protect me from personal guarantees that I signed for my S-Corp prior to filing? I am not filing on the business and would like to keep it as separate as possible.From what I have read here if you have a no asset case then all debts that were incurred prior to the BK are discharged. Is this correct or would I have to reopen my case later on if something horrible happened to the business?The business is currently stable, but I want to do everything I can to protect myself if something occurs down the road.
willingtocope Posted April 28, 2005 Report Posted April 28, 2005 A personal BK 7 will protect your personal assets from any personal gurantees associated with the business...but...since its an S Corp, you really should let it die and reopen under a new name. You and your S Corp are somewhat intertwined (as far as the IRS goes, anyway) and there may be some carry over from anything bad happening to the S Corp.This is one reason why LLCs and C Corps are definitely a better choice...no doubt that they're separate entities...
TTINC Posted April 28, 2005 Author Report Posted April 28, 2005 Thanks,I am not closing the business so I can't really just dissolve the S-Corp.Am I required to list any loans in the corporation's name that I signed for in my personal BK? I don't want to discharge the debt. I want to keep the business operating and pay these debts. I am just worried that if something happens 3 years from now that I will be a sitting duck with no personal protection.
willingtocope Posted April 28, 2005 Report Posted April 28, 2005 Well, if everything is going good now, I'd suggest you convert the S Corp to a C Corp or LLC and then get a loan in just the companies name without your personal guranantee.There really isn't anyway other way to "un-gurantee" personal liability...
willingtocope Posted April 28, 2005 Report Posted April 28, 2005 And, yes, if you filed personal BK, you should list all the debts you've personally guranteed. And, chances are all those creditors be discharged. There probably isn't any way to reaffirm them...unless they're secured loans...in which case the creditors would probably want their money immediately since you went bankrupt.
TTINC Posted April 28, 2005 Author Report Posted April 28, 2005 Most of it is leased equipment. I am just worried that if I include them in my BK that they will repo the equipment since they no longer have a PG even though the pmts. are current.Other than that I have a LOC and a couple of credit cards with low balances that I signed a PG for. If they demand that the corporation pays them in full then the business is sunk.
willingtocope Posted April 28, 2005 Report Posted April 28, 2005 I'm not a lawyer, and you may want to discuss all this with one, but my suggestion would be to convert to a C Corp or LLC as soon as possible. (Yes, it might cost more in income taxes, but at least the business affairs will be completely separated from your private affairs.) THEN, renogiate all leases and LOCs in the company name only...if you've had a couple of good years, you should be able to do that...
Recommended Posts