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  1. #1
    Join Date
    Jan 2010
    Posts
    1

    Default Effect of Personal Bankruptcy on a Business

    My question involves bankruptcy in the state of: California

    Good Morning,

    I'll start with a little background. I have owned a business (structured as a corp with me having 80% ownership) for over 10 years now and unfortunately have fallen into hard times. Cost cutting have enabled the business to meet monthly expenses. However, our bank have decided to close a 10year old credit line of 100k and have demanded payment. I do not have the funds to pay this off. The business only have enough funds for a week of operation. Also, the assets of the company consist mainly of 10 year old fixtures and 3 weeks of inventory( $25k value) with accompanying accounts payable.

    I have a personal guarantee on this credit line. However, I am personally worst off than my business financially. I have a mountain of credit card debt (charges are over a year or so old) which i am desperately trying to pay by negotiating with CC companies and a repossesion with a huge deficiency that a collection agency is trying to collect. I have no retirement account but my wife has a minimal ret account. No savings whatsoever.

    My question now is, since I am really at the end of the line here, if I declare personal bankruptcy will I be forced to close the business? Or do I have to file BK for the business and BK for myself? The business does provide me with minimal cash flow that I use to pay my personal monthly living expenses. I would very much like to keep the business afloat for the next 3 years as I am currently pursuing a degree in the medical field.

    One more thing my wife has a steady income but since I am the owner of the business my income fluctuates because I am always the last to get paid if ever I get paid.

  2. #2
    Join Date
    Jan 2008
    Posts
    164

    Default Re: Effect of Personal Bankruptcy on a Business

    I am not a lawyer but if my theory is correct you will have to close your business, or file chpt 13 bk. Been there done that!!! You must talk to a BK lawyer. good Luck



    God Bless

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