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Question
QUESTION: I have been in business for 12 years, an S corp. I have a lot of unsecured business debt that was personally guaranteed. I can no longer service the debt as we moved for my husbands job. If I filed chapter 7, will the discharged debt show up on my credit report? Secondly, since the business has no assets, can they go after real estate assets in my name?
ANSWER: I am sorry that you are facing such financial difficulties. The debts that someone discharges should show up on their credit report. In fact, I would hope they do, otherwise it looks like ythe money is still owed!
All assets that are owned become property of the bankruptcy estate. In fact the estate may also include assets that someone has transferred and those may sometimes be recovered for the benefit of the estate. However certain assets may be exempted from the estate. You need to consult with a attorney who is an expert in bankruptcy law to find out what, if anything, you stand to lose. You should also inquire about the wisdom of dissolving or bankrupting the corporation.
---------- FOLLOW-UP ----------
QUESTION: Thank you...just want to clarify...Although I formed a corporation years ago that has unsecured debt, if the corporation files chapter 7, the courts will go after my PERSONAL assets to cover corporate debt because the debt was personally guaranteed. Is that right?
Creditors holding your personal guarantees can sue you personally and enforce a judgement against your income and your personal assets, and if the corp files bankruptcy, (and you don't personally file) the trustee in bankruptcy can try to recover against you personally and your personal assets to pay for the corporate debts.
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Answers by Expert:
Los Angeles Bankruptcy Lawyer Leon D. Bayer
Expertise
Leon Bayer has successfully represented clients in bankruptcy for over 30 years. He is frequently called upon by the media, the California Bar and other associations to provide insight and help educate attorneys on bankruptcy issues. If you or other readers want to keep up with my blog postings about life in and out of bankruptcy, you can follow my blog at http://www.bankruptcyblogger.org/ and my personal web site at http://www.debt-relief-bankruptcy.com and A Human Guide to Bankruptcy at http://www.thebankruptcyguide.net/ Leon also writes about bankruptcy law for Nolo, see http://www.nolo.com/law-authors/leon-bayer.html and his "Ask Leon" bankruptcy law blog column at http://blog.nolo.com/bankruptcy/
Experience
Leon is a Certified Specialist in Bankruptcy Law by the State Bar of California, and has been a practicing bankruptcy lawyer in Los Angeles, California for 33 years.
Organizations
National Association of Consumer Bankruptcy Lawyers, California Bar Association, Los Angeles County Bar Association.
Publications
Author, ?The Essentials Of Chapter 13,? Daily Journal Report, December 18, 1987.
Contributing Editor, Basic Bankruptcy, California Practice Handbook, Matthew Bender 1992, 1993.
CEB Consultant, CEB-Personal and Small Business Bankruptcy Practice in California, 2003.
Education/Credentials
B.A., J.D.
Awards and Honors
President, 1995-1996-Los Angeles Bankruptcy Forum; Member - Los Angeles County Bar Association Committee on Commercial Law & Bankruptcy, 1988. Law Advisory
Commission-Personal & Small Business Bankruptcy Law of the State Bar of California, 1996-2000
MR. BAYER SAYS: The big banks and credit card companys have been working overtime for many years to undermine the Consitutional right of the American people to be able to claim bankruptcy protection. In 2005 the banking lobby successfully convinced Congress and the President to make the laws and proceedures more complicated, hopeing that it will stymie legitimate people from filing bankruptcy. They succeeded in gaining these complex new legal proceedures by greasing the legislative system with hundreds of millions of dollars in "campaign contributions." The good news for the American people is that while the new laws have made the proceedures needlessly complex to the point where inexperienced people can't help but trip over the maze of new rules and regulations, the process is still doable, especially with a lawyer who is well trained and experienced in this specialty.
Past/Present Clients
I have probably handled something on the order of about 15,000 bankruptcy cases thropughout my career.
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