Should I close my business before I file for bankruptcy? How? 7 Answers as of June 18, 2015

Should I close my business before I file for bankruptcy. I am completely broke with little inventory left and only around $500 in shelving, etc. I am a sole proprietor of a mobile convention / online business. I have huge personal credit card debt of $60,000 and had to sell my house last year after being behind 5 months. The buyer paid off the mortgages and the behind payments and then I gave him a deed of trust for 5 years for the reminder of the payments. My biggest concern is with the deed of trust. What will the bankruptcy courts do with this? This is my retirement egg. There are 4 years left on this first deed of trust. I am working several part time jobs and trying to run the business, but I am not making enough to keep up with all the credit card payments.

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GARCIA & GONZALES, P.C. | Richard N. Gonzales
With the information here, things look challenging. I would suggest you meet with a lawyer face to face. I charge for business consultations. But trying to answer legal questions without reviewing paperwork, is like calling some doctor at random, and trying to describe to the doctor a dark spot on an ex-ray of your lungs taken five years ago. "Doc, the spot is bigger then a nickel, but smaller then a quarter. It is not exactly black, but a darkish gray color spot. It's either on my left lung, or maybe my right lung. I feel okay. Doc, do I have any thing to worry about?" I think you get my drift. Pay an experienced lawyer for an hour of their time to review your situation.
Answer Applies to: Colorado
Replied: 6/18/2015
Garner Law Office
Garner Law Office | Daniel Garner
Typically you are required to shut down a business if you are filing under chapter 7. You would have to declare the value of the inventory, shelving and other assets of the business which remain. The bankruptcy trustee's main concern with a small business is that the trustee becomes responsible for it, and is exposed to liability if you cause any harm in your business. You would also need to disclose the situation with the deed of trust, although you might not lose the house. The homestead exemption is calculated based on the equity; i.e., the market value of the home minus the remaining debt. You could keep the house if it qualifies for the homestead exemption.
Answer Applies to: Oregon
Replied: 6/18/2015
Deborah F Bowinski, Attorney & Counselor at Law | Debby Bowinski
Yours is not a simple situation, and this is not the best forum for you to seek guidance. Do yourself a favor and sit down with an experienced bankruptcy lawyer to review your situation.
Answer Applies to: Colorado
Replied: 6/18/2015
Ronald K. Nims LLC | Ronald K. Nims
The deed of trust is a form of mortgage. Since this is a valuable asset, the bankruptcy court will probably seize it, sell it and use the proceeds to pay your creditors. But there isn't much of a market for a single non-conforming which means not written to be sold to a pension fund or other investor) deed of trust. They are unlikely to keep the estate open for five years for the deed of trust to mature. If they can't find a buyer, they'll let you keep it.
Answer Applies to: Ohio
Replied: 6/18/2015
Richard B. Jacobson & Associates, LLC | Richard B. Jacobson
The question appears to be whether you should close your business before filing a bankruptcy petition. The usual answer is that you should do so. Once you are committed to filing a bankruptcy, keeping a losing business open is rather fishy because it suggests that you are continuing to incur debt but with the intention of discharging it in bankruptcy. That is one form of bankruptcy fraud. Regardless of the potential fraud, there is not much sense in keeping an irretrievably sinking business afloat. It serves no good purpose, and is unfair to your creditors. As to the remaining payments due to you under the deed of trust, it is clear that you do not live in Wisconsin, to which this corner of the site is dedicated. Each state can have its own list of exemptions, valid in bankruptcy, and some states permit the use of a federal list. A skilled bankruptcy lawyer in your state and federal district can give you more guidance. I strongly suggest that you consult one.
Answer Applies to: Wisconsin
Replied: 6/18/2015
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    Whether you close your business before filing bankruptcy is the least of your problems. Since the business isn't providing you with an income, I would see shutting it down right away as a no brainer. I am concerned about you referring to a deed of trust as a retirement egg. Unless your retirement assets are properly established, you can lose all of it in bankruptcy court. So proper planning and making sure your paperwork is in order before filing bankruptcy will be crucial. I would hate to see you lose all your assets because you did not have appropriate legal advice.
    Answer Applies to: Nevada
    Replied: 6/18/2015
    Law Office of Michael Johnson
    Law Office of Michael Johnson | Michael Johnson
    IT is dependent on the value of the property and loan. You should consult with an attorney in your area.
    Answer Applies to: Florida
    Replied: 6/18/2015
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