Addressing my LLC when filing Chapter 7 Personal

[Anonymous]

Hello, I am in Colorado. and considering filing chapter 7 while trying to be proactive in understanding what I am facing.

• Personal debt is 25k including chase saphire card and medical bills that piled up after a stroke.
• Income was cut in half as I cannot return to FT work. (I have student loans but these are being deferred due to hardship/now COVID.)

This is where it gets overwhleming for me....I have an LLC and work part-time.

• LLC debt includes $18k on a Chase INK card. 

I have not used the cards in over 8 months. 

Both chase cards are 30 days late-the payments are just killing me as I used up my saving to basically pay interest.

Legal counsel suggested I file personal chapter 7 and that I can either

1. "run business as usual, stop paying the INK debt, wait and see" if they come after me then liquify assets, use $$ to pay rent/or some of debt... (I am a therapist so there are no assests but nothing but books and a couch.)
2. or "begin liquifying now, use for rent/or some of debt..."
3. Close down the LLC 
4. Start a new LLC.

My Q's are 

1) should I talk to another professional (like a CPA or something?) to navigate the business side of this? I do not want to mis step on the business side!! With the exception of the debt I am exteremly careful to do things legally, ethically.

2) How does his advice sound to you? I am super anxious about just defaulting on a anything but to do so with my business...yikes.

3) If you there is someone other than a lawyer I should consult please share...

PS, the lawyer is very reputable and the 2nd one I spoke to who had the same guidance.

My score is down to 618 form 780 18 months ago. I am just sick about all of this

Thanks for your help!!

G

[SouthJamaica]

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@Anonymous wrote:

Hello, I am in Colorado. and considering filing chapter 7 while trying to be proactive in understanding what I am facing.

• Personal debt is 25k including chase saphire card and medical bills that piled up after a stroke.
• Income was cut in half as I cannot return to FT work. (I have student loans but these are being deferred due to hardship/now COVID.)

This is where it gets overwhleming for me....I have an LLC and work part-time.

• LLC debt includes $18k on a Chase INK card. 

I have not used the cards in over 8 months. 

Both chase cards are 30 days late-the payments are just killing me as I used up my saving to basically pay interest.

Legal counsel suggested I file personal chapter 7 and that I can either

1. "run business as usual, stop paying the INK debt, wait and see" if they come after me then liquify assets, use $$ to pay rent/or some of debt... (I am a therapist so there are no assests but nothing but books and a couch.)
2. or "begin liquifying now, use for rent/or some of debt..."
3. Close down the LLC 
4. Start a new LLC.

My Q's are 

1) should I talk to another professional (like a CPA or something?) to navigate the business side of this? I do not want to mis step on the business side!! With the exception of the debt I am exteremly careful to do things legally, ethically.

2) How does his advice sound to you? I am super anxious about just defaulting on a anything but to do so with my business...yikes.

3) If you there is someone other than a lawyer I should consult please share...

PS, the lawyer is very reputable and the 2nd one I spoke to who had the same guidance.

My score is down to 618 form 780 18 months ago. I am just sick about all of this

Thanks for your help!!

G

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IMHO you should consult a different lawyer about how to deal with the business debts. And you should NOT default.

As to the personal bankruptcy, you should consult with someone who specializes in -- does nothing but -- consumer bankruptcy.  IMHO you don't really have enough debt to warrant such drastic action.

[CH-7-Mission-Accomplished]

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@Anonymous wrote:

Hello, I am in Colorado. and considering filing chapter 7 while trying to be proactive in understanding what I am facing.

• Personal debt is 25k including chase saphire card and medical bills that piled up after a stroke.
• Income was cut in half as I cannot return to FT work. (I have student loans but these are being deferred due to hardship/now COVID.)

This is where it gets overwhleming for me....I have an LLC and work part-time.

• LLC debt includes $18k on a Chase INK card. 

I have not used the cards in over 8 months. 

Both chase cards are 30 days late-the payments are just killing me as I used up my saving to basically pay interest.

Legal counsel suggested I file personal chapter 7 and that I can either

1. "run business as usual, stop paying the INK debt, wait and see" if they come after me then liquify assets, use $$ to pay rent/or some of debt... (I am a therapist so there are no assests but nothing but books and a couch.)
2. or "begin liquifying now, use for rent/or some of debt..."
3. Close down the LLC 
4. Start a new LLC.

My Q's are 

1) should I talk to another professional (like a CPA or something?) to navigate the business side of this? I do not want to mis step on the business side!! With the exception of the debt I am exteremly careful to do things legally, ethically.

2) How does his advice sound to you? I am super anxious about just defaulting on a anything but to do so with my business...yikes.

3) If you there is someone other than a lawyer I should consult please share...

PS, the lawyer is very reputable and the 2nd one I spoke to who had the same guidance.

My score is down to 618 form 780 18 months ago. I am just sick about all of this

Thanks for your help!!

G

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Chase Ink requires a personal guaranty so your personal debt is 25K + 18K for the Chase INK so 43K in consumer debt.    How much can you afford to pay per month?   At 1K/month it would take 43 months (longer to include interest); at $500/month it would take 84 months+ to pay off.   What is your income right now?    If you are just scraping by paying rent and food then 43K in debt might be worth discharging.   As far as your business it won't be impacted except you won't be able to use the Chase Ink card anymore and if the LLC is being reported to the credit bureaus it will no doubt show a chargeoff.

[loyalsudz]

I am sorry that this is overwhelming and a lot is going on.  As a disclaimer, I am no expert so I invite others to join in for OP advice and this is just my two cents which just from my own personal experiences sans bankruptcy but I have dealt with debt repayments and these are lessons learned from that. What ever you decide remember that there is no shame in filing bankruptcy or either to pay it off slowly overtime.  There are no wrong answers here except to select the option that will allow you to clean up your life and take the pressure off.  The pandemic with Covid-19 only shines a light on  the things we already knew.  Now you have a pretty clear picture and that is cool but anyone would be a little overwhelmed.

For a little bit of money you can file bankruptcy.  This is transactional; however, since you are overwhelmed I would like to point out the good news of your situation.  1) you have only missed 30 days late mark. The good news is creditors are very forgiving during Covid-19 and perhaps you can contact them and see if they can either provide you with a business loan to cover you with the new EIN business and forgive your 30 days overdue. Check with Business Cards and Charge Cards like American Express because they allow pay over time features to stave the times when business owners experience revenue droughts and these work well with planned business expenses as they allow you stave off payments so long as the expenses and bills related to the business are planned - align this with your business plan to make certain that your short-term through long-term spending plan is adjusted accordingly.  2) The personal bankruptcy may stay on your credit report up 10 years depending on the state laws although following the sage advice of bankruptcy section will help you out in less than 2 years after bankruptcy to assist with the aftermath of that 3) Speak to tax attorney if you need to file a close of business form and also send a copy to any registered agents in your business.  That is not too expensive to do and will allow the business to close without forfeiting it' depending on your state.  4) Not sure if app spreeing will assist in this case without more information and input from others.  If you hire the tax attorney, you may be able to borrow directly from the government but be careful because you already are overwhelmed by your debts.  The small business loans that are being floated in the government stimulus plan that do not have to be paid back during COVID-19 favor opening a small business now which is great.  The problem stems from the money running out before you can obtain it via the government sites but this money does not actually come from just government sites, it comes from the banks deciding even if you have to deliver pizzas try to keep paying the minimums.  So it is helpful to speak directly to your banks that you have credit cards with and do preventative maintenance, ask hypothetical questions if you need information to understand the process first and then take a day or two to call back once you understand your options: sleep on it rules rather than jumping the gun on new information.   The excess money can be deposited in to your accounts and used to pay off your existing debts.  To help clear up this mess by looking into a small business loan will only move the debt around but still the gravity of being able to pay for business costs can always be written off as assets are obtained from your business when you file your tax return this year for 2020.  Allegedly, the business assets allow you to benefit from their depreciation over time when you file your taxes lessening your overall tax burden as you write off a percentage of the difference.  Using a homebase as a business asset is a good idea as the home can allow you to larger tax base overtime to write off and any improvements as seen as strengthening that position, commercial leases are great too as they allow you to dump assets quickly without a buyer.  Imagine writing off a Picasso painting in your home, of course you still have to secure it and insure it - lol - that is lite tax nerd bantering and not to be a schmuck but it is not about me so my last point is pretty insane, drop the Dun and Bradstreet unless you mean to do an IPO offering in the next week for trading purposes.  That is a lot of money for something that just needs word of mouth at this time and you may be squandering resources that only well established businesses tend to take on that indeed have revenue reserves.  These are basic business startup options that makes it seem like a checklist to success and it is not necessary at this stage in your business plan, the only thing you need is a business bank account and the EIN number which you could obtain through the IRS.gov site in less than 5 seconds.

Consider eliminating or dropping the extras

The excess annual or semi-annual cost may not be necessary but add them in with milestones in your business plans to support the business growth overtime:  A business plan would assist you leveraging your assets and liabilities at the correct time even more so than any advice offered here.  A personal financial and wellness plan too so that you do not panic during the storms.  It will allow you to stagger in the up front options that are way too costly.  

Student Loans

This is still not panicking territory and considering student loan debt if Federal loans and not private may be paid off soon as a tax payer incentive under the current administration.  That takes that off the table and the current stimulus check is also going to be helpful too.  Just make sure you open a business checking account as the #1 preventative to obtaining a business loans for COVID-19 was that small business owners still only had personal checking accounts and that in and of itself disqualified a boat load of people right off the bat.  Still last steps - if you want to just pay off the debt yourself, remember to get motivation from some of the financial resources on the site here as well.