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Personal Chapter 7 in Texas and LLCs and other business assets


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My house was in loan modification review with Chase here in Austin, TX, at the same time it was in foreclosure set for auction on Nov.2nd, (a little over a week ago). On Nov. 1st, Chase still did not have a response if they have accepted the loan mod package or not even though we had been calling and calling, thus, I had no choice but to file an Chapter 7 BK myself to stave off the auction. Now, I didn't really want to declare BK, but I had to do it to save my home and buy time.

I have only 3 credit cards to my name that would be discharged, all 3 are in collections already, so I gain very little from the BK other than it saved the house from auction on Nov. 2nd. That said, I have been warming up to the idea of Chapter 7, and I was beginning to think I might as well do it and follow thru, it buys time and gets everyone off my back. However, I have to do this pro se, since I can't afford the usual $2000-2500 fee for any decent attorney to do the BK.

That said, I have been reading about Chapter 7 more and more in preparation to fill out all the schedules and other forms necessary 14 days after. And I have found out that I need to declare my business assets, bank account etc???? IS this true for an LLC that I own 100% of? I am self employed for the last 20 years with an LLC, my income has dropped off a cliff due to economy and I am $2-3K short each month which ate up my savings, in the lat year etc. and put me into the position of foreclosure in the first place and credit card default. However, since in the past few months I have not had to pay my $3500 mortgage or credit cards I have been able to save up $7-10K (it fluctuates) in my BUSINESS bank account. I don't even have a personal account anymore since I never pay myself a salary, the money goes into the business and right back out and my business has been paying ALL my bills.

So, my question(s) are:

1. I am under the understanding that I have to declare my business bank account to the trustee, and the assets. He is allowed to take this to disperse to creditors?

2. If the answer to 1 is yes, then I don't understand the diff between declaring business BK and personal, if they can grab your business assets and accounts? I guess its because I have a steak in it and they want that asset? In this case, 100% since its mine.

3. Moreover, the money in my business bank account is to keep my business running, buy product, manufacturing, etc. taking that money would destroy my only source of income and my business -- so, can I protect this?

4. Lastly, if they can take my biz assets, then I need to dismiss this I guess. If I do NOTHING from this point on, don't file the schedules, don't show up at the credit meeting, etc. the judge would dismiss the case correct? I am just thinking that if I file a motion to dismiss, then I loose any time I just bought by filing the BK and Chase will start back up again immediately. So, I guess, my question is if I don't follow thru on the paperwork, etc. does the judge usually simply dismiss it?

Basically, I am not sure what my options are and the facts about Chapter 7 and owning a small LLC. Should I proceed, motion stop it, do nothing and let the judge dismiss it?

Thanks in advance

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  • 1 month later...


I'm no expert but I just went though ch7 and I have an llc also. The limits of what can be used for creditors is someting like $7-10G or more, in NJ. They didn't care about my work van or tools. These weren't subject to any leins because they are used for work. Because I declared, not the LLC, they couldn't go after it. It didn't matter anyway, the value was too low and there are protections with regard to your source of income. The LLC is a like a separate person. If you declare BK, the LLC hasn't. It will continue to exist and you can do business. The lawyer said I was well below the limits of what would make them come fter my account but I had some of my money in my wife's separate bank account and in cash on hand for a few weeks while everything went through. It wasn't much but it made me look really really poor.

Get a lawer to do it. It cost $1400 for me. Its well worth it. Stall tactics only work if you have some greater strategy in mind. Otherwise, it doesn't get you anywhere. CH7 was the best thing I ever did. I'm scott free and I can live again. Too bad for the credit score but I lost nothing, other than that.

Good luck.

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