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S-Corp Bankruptcy

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dopey423

Junior Member
What is the name of your state? California

My family has a business and we are thinking about filing for bankruptcy because it is going under. If we do this, what will happen to our house? We used a home equity loan to buy the business. The business is under an s-corp but the house of course is not. There is a substantial line of credit that is now dry. There are business credit cards and health insurance under the corp.

What will happen exactly to the debt? and to the house etc.?
 


You certainly should see a local lawyer about this...most will give a free consultation to help you decide what to do. You might want to talk with a two or three until you find one you can work with.

I don't have all your answers, but here's some thoughts. You have two choices: BK the business; or declare personal BK, and just let the business die. If you BK the business, any debts which you have PERSONALLY guranteed, like the home loan and probably the credit cards, will still be your responsibility. If you do a personal BK, it will protect you from the credit cards, but you'll have to reaffirm on the mortgages to keep your house. And, of course, either way you'll still be responsible for any back taxes.

As for the health insurance, if you do the personal BK, you can still pay on it for some period of time in the companies name.

But...see a lawyer...
 

vik3001

Junior Member
re:

hi,

if someone has a scorp business and they file chpt 11. Can the creditors come after their personal house, car, investment property not connected with business? OR is it limited to only the stock or the cash flow in the business acct or assets of business etc. how does this affect starting a business after that?

this is for informational purposes only and its not happening to me or anyone I know

thank you!
 

JustAPal00

Senior Member
hi,

if someone has a scorp business and they file chpt 11. Can the creditors come after their personal house, car, investment property not connected with business? OR is it limited to only the stock or the cash flow in the business acct or assets of business etc. how does this affect starting a business after that?

this is for informational purposes only and its not happening to me or anyone I know

thank you!
The only creditor that can come after you is the IRS for any back taxes owed by the business.
 

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