Expert: Mark J. Markus- California Bankruptcy Attorney - 2/8/2009

Question
My wife and i own a small number of single member llc startups all created for legitimate reason but with significant intermingling of personal and business finances.  I noticed on a business credit card "cardmember agreement" that the business as well as the individual is responsible for payment for the expenses on the card.  If we file for personal bankruptcy what are some likely outcomes of these situations given current interpretations of llc law considering Albright, alter ego and reverse-piercing?
Questions:
1. has the credit card company already reverse pierced the debt, allowing us to discharge it as well
2. can we retain the ownership of the llc's names and our single share in them or will the few assets they have be liquidated along with the name(they don't have any real assets as services, maybe less than $500) as the only member in the llc, or can we reverse pierce ourselves and claim them as exemptions since our state allows a "professional" and "trade tools" exemption(colorado)?
3. are we criminally liable for fraud charges if found(or if we ask for the businesses to be treated as a sole-proprietorship's which is how we file) to have operated an llc as an "alter ego", considering also that one business loaned money to another through the business credit card? (we didn't do anything intentionally malicious or fraudulent just didn't realize there needs to be such a formal distinction such as promissory notes between finances for llc's or how the fact that we file as sole-proprietorship factors into the structure)
I guess the whole question is about trying to keep the business's which have no debt(except maybe the one with the credit card) and a potential for us to get back on our feet while discharging our personal debt.

Thank you for your time and consideration to my complex situation!

P.S. Please don't tell me I need specific advise from a bankruptcy attorney in my area.  I'm looking for general advise not specifics at this point.

Answer
1.  I have never heard of "reverse-pierced".   From the way you describe it, there may be either joint liability between the corporation and yourself personally, or perhaps a personal guarantee on some of these debts.  If so, then either way both the corporation (LLC) and you are liable, so filing a bankruptcy for one does not have any effect on the other.   You may benefit from reading my webpage on this topic at http://www.bklaw.com/business_bankruptcy.html

2.  Your interest in the corporation will be an asset of the bankruptcy estate.  Whether you can retain your interest depends on A. What chapter you file; B. what exemptions are available in your State and C. The value of your interest in the LLC.   If you have failed to maintain proper corporate formalities (such as commingling, as you indicated) then the individual assets of the corporation may also need to be exempted, as well as its intangible values, such as goodwill.

3.  There shouldn't be any criminal liability (but you'd need to discuss that with a criminal attorney), but it certainly may be a basis for a creditor to object to the discharge of the debt in a personal bankruptcy case.

Your situation requires careful analysis by a bankruptcy, and possibly also a corporate, attorney in your area, especially since the alter ego aspects of this (piercing the corporate veil) would likely be based on Colorado law, assuming that is where the LLCs are located.