PERSONAL DEBT VS. BUSINESS DEBT (SOLE PROPRIETORSHIP)

[stinkinlincoln 0]

If anyone has peeked at my other post,

http://www.creditinfocenter.com/community/topic/326900-who-is-smart-could-get-me-started-in-my-path-to-california-settlements/

 

i had 2 failed businesses & racked up 100k in debt i intend to fight & settle.

 

-i have stopped paying on all the business cards and accounts and intend to settle with them down the road.

 

-i have 1 personal card that is still active & current. They haven't cancelled it yet but i intended to keep it unless it will cause issues.

 

& correct me if im wrong, but personal and sole prop debt is viewed as all personal.

 

MY QUESTION IS: Will having a personal, active, current, cc account "chase" on my credit report with a 3000 balance (that i intend to keep current), effect in a negative way future settlements/ lawsuits or anything else? 

 

I'm just assuming at some point they might be viewing my credit report & see, ok he has a mortgage, hes current & paying, he has a credit card, hes current and paying. Why isnt he paying us? truth is, theres no way in hell i could pay them especially since minimum payments equate to over 3000 a month & of course the business, that paid the debts, is now insolvent, closed and no more.

 

thanks for your input

[willingtocope 1,336]

You're right.  Since you undoubtably had to personally guarantee the "business" credit cards, it is all personal.  And, technically, the FDCPA does not apply to "business" debt, you may have fewer options in dealing with any CAs that might get involved.

 

And, yes,  creditors will look at your personal credit reports...see the open accounts that you're still paying on...and be harder to deal with.

 

I was in a similar situation 10 years ago...I did a BK 7 to get out of it.

[stinkinlincoln 0]

You're right.  Since you undoubtably had to personally guarantee the "business" credit cards, it is all personal.  And, technically, the FDCPA does not apply to "business" debt, you may have fewer options in dealing with any CAs that might get involved.

 

And, yes,  creditors will look at your personal credit reports...see the open accounts that you're still paying on...and be harder to deal with.

 

I was in a similar situation 10 years ago...I did a BK 7 to get out of it.

i considered a chapter 7 & 13, but i have 150k equity in the home. only 70,000 is protected in californias homestead. filing, the trustee would likely look at that equity. not filing would likely get creditors to fantasize about the equity. i guess im worred about a forced sale.

 

my situ is kind of unique in that, ive tryed to exhaust the equity to prevent that, but i cant get a loan because im subject to 2 yr short sale waiting periods (modification in 2014). only option, in regards to my house, is to sell (unless you guys have a better idea). 

 

i was hoping for a cash out 2nd...maybe ill try a higher interest portfolio 2nd?

[willingtocope 1,336]

Have you  talked to a BK lawyer?  You might be able to keep the house...

[Clydesmom 1,217]

& correct me if im wrong, but personal and sole prop debt is viewed as all personal.

 

You are correct.  Even if it was business debt, most credit accounts for businesses now have the owner sign a personal guarantee on the debt to facilitate another avenue of collection in case of default.

 

-i have 1 personal card that is still active & current. They haven't cancelled it yet but i intended to keep it unless it will cause issues.

 

MY QUESTION IS: Will having a personal, active, current, cc account "chase" on my credit report with a 3000 balance (that i intend to keep current), effect in a negative way future settlements/ lawsuits or anything else? 

 

Could it affect possible settlements?  Sure.  There is no way to predict.  

 

However, I think you have a bigger problem with this plan.  Once you default on the other accounts CHASE will find out. The creditors monitor for these issues.  Despite your good payment history on their account if they do not close it outright to prevent further losses of their own they are most likely going to "balance chase" you until it is down to nothing and then close the account.  The chances of keeping this account while you default on that much debt is slim to none.  CHASE is very conservative when it comes to these issues.

 

Your best bet with that much debt is to consult with a couple of BK attorneys and see what your options are.

[stinkinlincoln 0]

"Could it affect possible settlements?  Sure.  There is no way to predict.  

 

However, I think you have a bigger problem with this plan.  Once you default on the other accounts CHASE will find out. The creditors monitor for these issues.  Despite your good payment history on their account if they do not close it outright to prevent further losses of their own they are most likely going to "balance chase" you until it is down to nothing and then close the account.  The chances of keeping this account while you default on that much debt is slim to none.  CHASE is very conservative when it comes to these issues.

 

Your best bet with that much debt is to consult with a couple of BK attorneys and see what your options are."

 

 

 

in regards to that, should i close the personal chase account ( because its really not important)? or use the remaining balance to wash out some small debts i have with the old business... 

 

 

 

BK lawyer is concerned with equity. He recommends getting a 2nd mortgage, getting equity down into exempt range, and use the 2nd to buy upgrades for the house like solar, hardwood floors etc. and then after a few months, discharge the 2nd. And as crazy as any of that sounds, a consultant for bk (ex court appointed trustee) said that would fly in a court of law. anyways, sounds good and all but im havin trouble finding a bank to refi my house.

 

now with that being said, i want to try to avoid bankruptcy because of my wives career and to fight and use bk as a last resort. but i have 20+....you heard me correctly...20+ creditors amounting to 100k 

 

of course i probably should seek a 2nd opinion.

[1stStep 242]

A second opinion is always good to have.

 

 

Unfortunately, you are in a tough spot... always, always, always incorporate.

 

Since you're married your homestead exemption is $100k or $175k if you're over 65. See AB1046 (2010). 

[fisthardcheese 1,484]

I agree with getting a second opinion on BK.  I think it may be your best option given all of the facts on the business debt, the amount and everything else.