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NJ Small Biz Bankruptcy - Just wondering...


suzebqueen
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The debt I have is from a business that failed. I started the business in 2005 and closed it in 2008....I did not become an LLC until 2008..and most of the 5 credit cards I defaulted on in 2008 are business cards (although ALL the cards were used for the business)...I have been DV'ing and started talking settlements but we are really struggling to make ends meet now and it will be hard for me to pay them anything right now....I am about 35k in debt at this point.

I am married with a daughter...own a home that does have equity....and my husband has money tied up in his own name....I personally have no assets at all....

Would bankruptcy of just the business work in this scneario so that nothing is taken from him or our home?!? The credit cards are personally guaranteed so not sure how it all works...

Just trying to get a feel of how the courts would treat the situation...if it seems feasible to do a bankruptcy of just the business then I will look into getting a lawyer...but if they are going to attack my husband or our home I will have to figure out something else....

Thanks as always...

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Filing BK on the business only will not work for you because of two things:

1) The business debt you have incurred has a personal guarantee. It's there in the fine print. So the debt just moves from the business name to you personally.

2) The LLC is considered an asset of yours. Even if the asset is really a liability! :shock:

Most of us had to file a personal BK to discharge the debt entirely and closed the business. There is a good article on the pros and cons of filing just the business and filing personally.

You can get additional information here: http://www.moranlaw.net/business-bankruptcy-FAQs.htm

Check your states exemptions here: http://www.legalconsumer.com/bankruptcy/state_bankruptcy_info.php?st_fullName=New%20Jersey

The best way to determine your course of action is to research here of course and interview a few BK attorney's that are familiar with the small business complications in BK. Not all attorney's are alike, so interview them carefully. The initial consultations are typically free.

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its no secret money is tight however this company helped me with payment arrangements then took off my credit due to my promise to pay my bill on time with them its real simple work with them and they will do alot for you ......it;s your debt pay your bill and the phone calls will stop collectors are not all bad I have nothing but good things to say about this company, they helped me get my mortgage, so drop the poor me bit and dont avoid them, to money you basically stole from a company and you truly owe and pay your bill!!!!!!!!! p.s bad things happend to good people stop your whining and get a job maybe they are hiring. a happy customer:)

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Thanks Denita--and spam ignored....seeing more of those lately! I appreciate your feedback and will take a look at those links...I am going to be contacting a couple of attorneys as suggested....just doing my homework first to try and make sense of it all! Thanks again...off to read...

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I have a similar reflective situation, only probably 10 times worse.

The advice to see SEVERAL BK attorneys is sound. I've seen 3 of them. 1 told me flat out my case is over his head. Another plugged me along to set up for BK., but admitted later it was over his head. I then saw the top BK attorney in my state. I spent $4000 for him to analyze and discuss the situation. He knew his stuff as a BK trustee for the court as well.

After all the info sorting, and blathering, It all came down to the "jump off the cliff" on the assets I would lose vs. unsecured debt. (All my secured debt is current.)

Attorney wanted me to jump off the cliff with a 7 BK, I said its too much to lose. (13 BK would have been impossible payment amounts for me.) He informed me I will get sued and judgments would ensue. I told him I could fight, maybe pay if needed, and always nuke it later with BK if judgments become voluminous. He flat out told me I was crazy.

1.5 years later, this attorney checked in and is impressed with my fight. Only $27,000 in judgments, with $17,000 on a solid appeal, I'm fairly confident I will win. Remaining $10,000 is in a court ordered State Ch. 128 pmt. plan.

There are no other judments on the horizon. I "de-fanged" all other litigation by exercising the arbitration clause, which exists in 95% of all credit card agreements. (In WI, consumer credit card arbitration is procedurally and substantively unconscienable.)

I can't reccomend my course of action in any other state, unless you have good consumer law in your state, are very willing to embrace adversarial proceedings, and have a state that also has destroyed consumer credit card arbitration. (So you can use the arbitration clauses against them as a consumer weapon! It is SOOOOOOO satisfying after reading about consumers getting screwed in arbitration in the past!)

Just keep in mind...no matter what you do...you can always "nuke it" with Ch. 7 at anytime.

Default and negotiate on these unsecured business cards first. I bet you could clear it for an average 30 cents on the $.

If not, let them come for you. Do DV's from this site, include cease communication in letter. If you get sued, Get some good victorious court pleadings from your local court house, copy them, and use them.

If you lose, just pay it. If can't pay judgment, just nuke it!

Doing those 2 suggestions will get you 2 years to plan.

Ch 7 is always the safety net, no need to neccessarily pull that card first. but see a good BK attorney for sound advice first before you consider my suggestions.

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trueq that is interesting....that is one of the other things i was debating, whether just to wait it all out and see if the creditors do sue...and then offer a settlement before it goes to court....what exactly is the "arbitration" clause?!?! I have never heard of that before...not sure whether or not Nj is a consumer friendly state will have to look into that...but I do have to say I like your plan....

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95% of credit card agreements have them. They are meant to SCREW YOU OUT OF YOUR RIGHTS! TAKE AWAY YOUR RIGHT TO A JURY, DISCOVERY, ETC.

Arbitration is a paper mill scam to rob you of your rights. If you have an AMEX, Chase, Bank of America, Capital One, Citibank, you can be subjected to arbitration.

BUT!

Some states have stopped confirming credit card arbitration awards (Confirmation is the process of turning arbitration awards into a judgment). Arbitration awards without court confirmation is worthless! The reason confirmations have stopped in some states is because courts realize consumers are being screwed!

Here's the kicker....Arbitration clauses have been modified in recent years to make them more "fair". Meaning consumer can choose to force arbitration on bank issuer. This was not a smart thing in the past, because you would screw yourself out of your rights.

However, if you force them into arbitration, PREEMPT THEIR LITIGATION RIGHTS, and they can never confirm their arbitration award.....

Well you don't need to be a rocket scientist to see its a litigation dead end for the person suing you. As this catches on, it will force arbitration in credit cards to go away!!!

This is all dependant on what is going on in your state. Many states have stopped confirming credit card arbitration awards, probably as a result of a class action.

You need to research your state and get copies of those cardholder agreements.

P.S. Credit cards are most negotiable 8-12 months out from default in my experience. Anything over 30 cents on the $ in this day and age is too much.

Can you save over next 12 months to pay off the whole issue for 30%?

If so, take that route. Otherwise, take your chances.

But if collectors think you have assets, you will get sued.

Judgment in this case means you will have to write a check.

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