Should I file personal or business bankruptcy? 19 Answers as of July 03, 2013

For past 6 or 7 years our business has operated at a loss. We refinanced our home in 2011 and was able to satisfy the loan on our business property -so we own the business property (building and land)-free and clear. If we file business bankruptcy, will we lose this property? Could we deed this property to a family member prior to filing to protect this property- it is the only thing we own free and clear after 30 years of business. We are currently unable to pay our business credit card and line of credit debts. Since all our business credit cards are guaranteed by business owner do we also have to file personal bankruptcy? Will we be able to keep our home and our car? All our vehicles are in the business name. We also are not current on our 2010 business taxes, but we have filed and paid all previous years, how will this impact our ability to file? We estimate our business debt at about $85,000.

Ask a Local Attorney. 100% Anonymous. Free Answers.

Free Case Evaluation by a Local Lawyer: Click here
Theodore N. Stapleton, PC
Theodore N. Stapleton, PC | Theodore N. Stapleton
You raise many questions which depend upon many things, are you incorporated, how much equity is in business property?
Answer Applies to: Georgia
Replied: 7/3/2013
Heupel Law
Heupel Law | Kevin Heupel
Business debts are complicated especially when you personally guarantee the debts. The best advice is to consult a bankruptcy attorney who specializes with businesses. Until then, do not transfer any property as that will only make matters worse while trying to plan a bankruptcy.
Answer Applies to: Colorado
Replied: 11/4/2011
Bankruptcy Law Center
Bankruptcy Law Center | Bill Zurinskas
Everything depends on the type of business entity you operate under. Is the business a corporation, LLC, partnership or sole proprietorship? Talk to an experienced business bankruptcy attorney ASAP. The fact that your business property is free and clear is troubling.
Answer Applies to: Colorado
Replied: 11/4/2011
The Law Office of Darren Aronow, PC
The Law Office of Darren Aronow, PC | Darren Aronow
In todays environment, many of the chapter 7 trustees are going after your equity in the business assets, so you may want to file a chapter 11 to restructure the debt in the business or even a chapter 13 to restructure your debt, if your assets and debts are not too excessive above the chapter 13 limits.
Answer Applies to: New York
Replied: 11/4/2011
Charles R. Nettles - Attorney at Law
Charles R. Nettles - Attorney at Law | Charles R. Nettles
This is a pretty complicated situation. You can keep your home and auto in a bankruptcy presuming that they are yours to keep. If everything is in the business name, then it will be liquidated in a business bankruptcy to pay your creditors. Transferring the property out of your name into a relative's name on the eve of bankruptcy is usually not a good idea. You may sell it for fair market value to anyone you choose but a mere transfer without consideration (an exchange of money or other valuable assets) creates a voidable transaction that could get everyone in trouble and potentially result in the denial of a bankruptcy discharge. You should seek professional advice before doing anything or you may shoot yourself in the foot in regard to the possibility of any bankruptcy relief.
Answer Applies to: Texas
Replied: 11/4/2011
    Law Office of Harry L Styron
    Law Office of Harry L Styron | Harry L Styron
    The first two issues are whether or not the business is incorporated and whether it can continue to generates an income for you. In either case you will be filing a personal bankruptcy. The analysis of what to do with filing for the business depends on what equity it has it what it owns. As far as you are concerned, because of the guarantees if you cannot pay off all of the debt you are going to have to file personally. If you have a regular income, whether from the business or some other source, you can probably file Chapter 13 and keep everything, by making a repayment plan and paying off everything you owe over 3-5 years. But your situation is quite complex, and you really need to discuss it in detail with a bankruptcy attorney to determine what is the most advantageous course to take.
    Answer Applies to: California
    Replied: 11/4/2011
    Canty Law Firm
    Canty Law Firm | Timothy Canty
    Your situation is too complicated to address in a brief email. I would be happy to give you a free consultation, but here are a few pointers: Do not transfer any property to anyone without consulting with experienced bankruptcy counsel. There are many issues: who owns the business property and how much is it worth? If the business is a corporate entity (as opposed to a sole proprietorship), it is not entitled to a bankruptcy discharge and would be liquidated in a Chapter 7. Whether you can keep your house and cars also depends on how much equity you have. If you file personally and the company has a negative net worth, it would likely survive the bankruptcy. The taxes are not old enough to be dischargeable. But again, don't do anything until you have received good legal advice.
    Answer Applies to: Colorado
    Replied: 11/4/2011
    Moore Taylor Law Firm, P.A.
    Moore Taylor Law Firm, P.A. | Jane Downey
    You need to consult with a bankruptcy attorney. Be sure to pick a certified specialist. You didn't tell me the equity in the business property but the business most likely would lose it in a 7. You should not deed it unless you sell it for market value.
    Answer Applies to: South Carolina
    Replied: 11/4/2011
    Charles Schneider, P.C.
    Charles Schneider, P.C. | Charles J. Schneider
    For past 6 or 7 years our business has operated at a loss. We refinanced our home in 2011 and was able to satisfy the loan on our business property -so we own the business property (building and land)-free and clear. If we file business bankruptcy, will we lose this property? You may depends on its value and who is we. Could we deed this property to a family member prior to filing to protect this property- it is the only thing we own free and clear after 30 years of business. No the Trustee will find out and sue your family member for a fraudulent conveyance and possibly sue you and deny you a discharge of your debts for concealing it. We are currently unable to pay our business credit card and line of credit debts. Since all our business credit cards are guaranteed by business owner do we also have to file personal bankruptcy? Yes. Will we be able to keep our home and our car? Depends on its value and how the property is held. All our vehicles are in the business name.
    Answer Applies to: Michigan
    Replied: 11/4/2011
    Law Offices of Kenrick Young
    Law Offices of Kenrick Young | Nicholas Lazzarini
    If your business debts are guaranteed by you as the business owner, you will likely need to file a personal bankruptcy which would include the business debts. Also, if you intend to keep the cars in the business name, the same would be necessary. Any transfers of property you make to friends and family within 1-year of filing bankruptcy may later be avoided by the trustee as insider transfers, and may also result in criminal charges if the transfers are deemed to have been made with intent to defraud creditors. You should consult an attorney about proper exemption planning to maximize your asset protection as you dissolve the business through bankruptcy.
    Answer Applies to: California
    Replied: 11/4/2011
    Judith A. Runyon, Esq. Attorney at Law
    Judith A. Runyon, Esq. Attorney at Law | Judith A. Runyon
    You need to talk to a bankruptcy attorney to discuss things.
    Answer Applies to: California
    Replied: 11/3/2011
    Gregory J. Wald, Attorney at Law
    Gregory J. Wald, Attorney at Law | Gregory J. Wald
    In giving you this information, I'm going to make the assumption that you formed a corporation or LLC for the business. If the business files chapter 7 bankruptcy, its assets will be liquidated for the benefit of creditors. It may be possible to keep the property in a bankruptcy reorganization (chapter 11) case, but if it is not profitable this may not be feasible. Since you guaranteed the debts, you would also need to file personal bankruptcy or else the creditors would be able to collect from you personally. There are exemption laws that allow you to keep a house and car in your personal bankruptcy, up to certain limits. But if the cars belong to the business it would be liquidated in the corporate case. If you transfer property to a family member or anyone else without full consideration paid to you, this is fraudulent. The bankruptcy court can reverse the transfer and you could be denied a discharge of your debts. You can file even if you owe business taxes, but they may or may not be eliminated by your bankruptcy case.
    Answer Applies to: Minnesota
    Replied: 11/3/2011
    Buff & Chronister
    Buff & Chronister | G. Scott Buff
    You have a great deal going on and you should consult an experienced Bankruptcy attorney who handles both business and consumer matters. First, if you file a consumer case or you put your business into a Chapter 7 Bankruptcy, a Chapter 7 Trustee will liquidate the business property for the benefit of your unsecured creditors. You will not be able to protect that property by transferring it to a family member and then filing for Bankruptcy. You will have to disclose the transfer on your Bankruptcy schedules and the Trustee can simply unwind the transaction and pull the property into the Bankruptcy estate. You could have a situation where it would make since to liquidate the business in a Chapter 7 thereby reducing or completely eliminating your personal obligations for the business related debts. If the business files for Chapter 7, then none of your personal assets can be liquidated for the benefit of creditors. If you do find it necessary to file a personal or consumer case, then what you can keep depends upon the value of your personal assets, as there are exemptions in different types of property. These exemptions place equity amounts in certain types of property beyond the reach of your creditors. Again, you have a number of issues going on and you should consult counsel before making any decisions. If you are seriously contemplating Bankruptcy, you should not transfer any assets before consulting with Bankruptcy counsel. You could make things much worse by transferring assets prior to filing for Bankruptcy.
    Answer Applies to: Georgia
    Replied: 11/3/2011
    The Schreiber Law Firm
    The Schreiber Law Firm | Jeffrey D. Schreiber
    Your largest issue is the value of the business property. Even if the business is incorporated, the shares of stock you own are part of the bankruptcy estate. Depending on the state where you live, property can be protected by exemptions, yet I doubt that there is enough exemptions available to cover the full value of the land and property and vehicles no matter which state where you reside. If that is the case, a Chapter 7 will sell the property to pay your creditors. You cannot just transfer the property to someone else then transfer it back after the bankruptcy is finished. That is fraud and the trustee could recover from the person to whom you transferred the property and you lose all exemption rights you may have had. If you transfer the property and do not disclose it in your bankruptcy papers, that is perjury and subjects you to a $500,000 fine and a maximum of 5 years in federal prison. A reorganization bankruptcy where you pay your creditors over time may be an option. In all events, your situation as outlined is something where you should seek competent legal assistance from an experienced attorney in the area of debt matters.
    Answer Applies to: California
    Replied: 11/3/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    Deciding what type of bankruptcy to file requires a review of all the circumstances. An individual who owns a business can file chapter 7, 13 or 11. Chapter 7 is a so-called liquidation where non-exempt assets are sold for the benefit of creditors. Chapter 13 is a payment plan whereby you can keep or give up your business. Chapter 11 is the most complicated bankruptcy and is a reorganization. If the business is a separate corporation it can file chapter 7 or 11 but not 13. There are no exemptions for a corporation that files bankruptcy. The assets you are individually able to keep in chapter 7 are subject to exemptions, which vary state to state. These are some of the factors that will determine which bankruptcy is best to file. Consult an attorney for your specific situation.
    Answer Applies to: California
    Replied: 11/3/2011
    Law Offices of Daniel Moulton
    Law Offices of Daniel Moulton | Daniel Moulton
    You can't transfer the property and file immediately after. You would need to wait three to five years after a transfer. Otherwise, you are in jeopardy of losing the property.
    Answer Applies to: Illinois
    Replied: 11/3/2011
    Tony M. May Attorney At Law
    Tony M. May Attorney At Law | Tony M. May PC
    To whom it may concern, In order to provide you with the best answer to your question, I recommend that you contact a bankruptcy attorney so you can discuss all of your options. You have a unique issue to deal with (i.e., the ownership of your business property) that needs to be addressed so that you can be informed as to your best option to proceed. However, in general, if you are personally liable for your business debts, you will likely have to file for personal bankruptcy if you want to be sure no one could come after you for the business debts. Also, if you deed the property to a family member, you are only asking for problems as you will have to discuss this to the bankruptcy trustee.
    Answer Applies to: Nevada
    Replied: 11/3/2011
    The Orantes Law Firm
    The Orantes Law Firm | Giovanni Orantes
    *You should not engage in transferring anything to anybody or wasting your retirement funds, if any*, until after you consult an experienced bankruptcy attorney. Doing so could rob you of options otherwise available to you. The short answer to your question is that you must consult an experienced attorney as soon as possible. A necessarily incomplete preview of the considerations and the law is as follows: the basic concept of bankruptcy is that you get a fresh start free of your debts in exchange for your *unexempt* assets. Assets are exempted as provided in the exemption laws of each state (or under the federal Bankruptcy laws, if applicable). The exemption laws reflect the policy decisions of each state as to what a person who wipes out debts should retain. The list in each state is quite long, but they usually include an exemption up to a certain amount for a homestead, a certain amount for one vehicle, an unlimited amount of ordinary 401K plans, etc. In the end, most people who file for bankruptcy protection retain all of their property, but people who have a lot of unexempt assets do not and may need to file under a different chapter to repay some or all of their debts over time. The bottom line is that you should consult an experienced business and consumer bankruptcy attorney. You may contact us at 213-389-4362 or from gobklaw.com for a free initial in-person consultation.
    Answer Applies to: California
    Replied: 11/3/2011
Click to View More Answers:
12 3 4 Free Legal QuestionsConnect with a local attorney