Okay- I have a huge multi-part question.
We own a business- well, not own- we owe nearly $100,000 to the bank for our business- my husband is the personal gauranteer (sp?) on our secured credit. It's secured by a lein on our business vehicle and his Harley.
Long of the short, our fresh disposable product business hasn't cash flowed for some time, we're behind w/vendors (need to have fresh product to keep the business going) and it has started to affect our personal lives in a big way financially. So- to get back in the black in our personal lives- hubby has taken a 'real job' where he actually gets a paycheck (yay!).
We met w/a bankruptcy attorney who has advised us that we can file Chapter 7 since hubby is the personal gauranteer on everything. In essence, all of our store inventory and non-exempt personal assets would be liquidated, creditors paid off and debt discharged. Is my understanding correct?
We're seeing bankruptcy as a last resort here and are trying to work with the bank (small town community bank). Basically, they're telling us to keep operating until we can sell. (We're maxing out our credit w/vendors so the bank wants us to finance more to pay vendors off so we can stay in business until the store sells).
Bank wants us to sell the business for what we can. Then, sell the van and Harley tied to the note. Next, would be to liquidate all of our personal assets that we can live without- camper, 4-wheeler, dogs, etc. (The assets we do have are not worth much. Camper is worth $2,500, 4-wheeler $1,500. Dogs $1,000.) Finally, to sell our house and give them the equity we've earned from our house ($15,000 +/-) to pay off the note. Somehow this is a win-win situation? I know that they need to be paid, and we are obligated to pay them. However, how is that helping us at all? I know the note would be satisfied and our credit intact. But, if we file bankruptcy at least we can keep our assets.
In addition, we'd still have the vendors to pay off (unsecured credit). So- the bank wants us to refinance with them to pay vendors off, sell the business, and sell all the personal assets we can to pay our note off. Our other option is bankruptcy. Which unfortunately, is looking more appealing.
From what I understand, I'd rather file Chapter 13 and pay what we can back rather than risk losing my non-exempt assets with Chapter 7. I know that our debt would be discharged. However, we took the risk and created the debt. Chapter 7 freaks me out a little. I just picture a the 'repo men' coming into my house, rummaging and taking whatever appears to have value.
I know that was really long. But- if you were able to take the time to read it, I'd appreciate any input. Feel free to correct any misunderstandings I may have regarding bankruptcy laws. Thanks!
Ohh.. Sorry- one more question. If we sell our house while in either Chapter 7 or Chapter 13 what would happen to the profit we made off the house? Do we pay it to the bankruptcy estate or is that protected? Thank you!

