QUESTION
Should I close my business before I file for bankruptcy?
Asked on Jan 19th, 2011 on Bankruptcy - California
More details to this question:
Should I close my business before I file for bankruptcy. I am completely broke with little inventory left and only around $500 in shelving, etc. I am a sole proprietor of a mobile convention / online business. I have huge personal credit card debt of $60,000 and had to sell my house last year after being behind 5 months. The buyer paid off the mortgages and the behind payments and then I gave him a deed of trust for 5 years for the reminder of the payments. My biggest concern is with the deed of trust. What will the bankruptcy courts do with this? This is my retirement egg. There are 4 years left on this first deed of trust. I am working several part time jobs and trying to run the business, but I am not making enough to keep up with all the credit card payments.
7 ANSWERS
You need to call me, Michael Berger, for a free consultation. The real question is not the one that you list first (should I close my business before I file bankruptcy), but what will happen to your deed of trust if you file bankruptcy. As to the business, it does not matter if you close it or not. You do not say if it is a corporation, an LLC or a sole proprietorship. You do indicate that its assets have little value. Its assets will probably be abandoned by the Trustee (left with you) if they are of little value.
The big problem is the deed of trust. There is no exemption for deeds of trust. You will have to fit in the "wildcard" exemption in order to keep ownership of the deed of trust. You do not say what the amount of the promissory note and deed of trust is. If it is over your available exempt amount, the Trustee will take the deed of trust from you and sell it for the benefit of your creditors. If it is worth enough, he will pay all of your creditors in full with the proceeds after paying himself, his attorney and any broker involved in the deal. You DON'T want this to happen.
Answered on Feb 12th, 2011 at 5:43 PM
Bankruptcy Attorney serving Hayward, CA
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Carballo Law Offices
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If you sold the house then how can you give the buyer a deed of trust? You cannot give a deed of trust (which is a lien) on property you do not own anymore. Do you mean that the buyer owes you some money and gave you a deed of trust to secure that debt for part of the purchase price? You need to explain what you mean. If you are the beneficiary of the deed of trust for the loan owed you in connection with the sale of the house then there is an amount you can protect (exempt). You can exempt some of it but that would depend on other property you might own free and clear. The wildcard exemption in California is $23,250 approximately that you can use to exempt the promissory note secured by the deed of trust if that is your situation. As far as closing your business before filing for bankruptcy, that might simply things. If you liquidate the business assets you need to keep good records of how much you received and where the money goes. It cannot just disappear. You must account for the proceeds of the sale from the business assets. You can use the money to live on if reasonably necessary. It sounds like you really need to see a local bankruptcy attorney immediately to do some legal pre-filing planning. You have lots of issues that cannot be answered on the internet and you are probably stressed out and confused. Go see a bankruptcy lawyer immediately.
Answered on Jan 20th, 2011 at 7:58 PM
William C. Gosnell
Hire a bankruptcy lawyer this problem with the house an the deed of trust must be thoroughly analyzed.
Answered on Jan 20th, 2011 at 6:43 PM
Family Law Attorney serving Kingston, NH
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DiManna Law Office, LLC
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You should consult with a bankruptcy attorney so that the attorney can review the Deed of Trust and the timelines etc. to give you the best advice about this.
Answered on Jan 20th, 2011 at 6:13 PM
judith runyon
Too many issues to reply. You need to call my office for further information to discuss.
Answered on Jan 20th, 2011 at 5:58 PM
Litigation Attorney serving San Gabriel, CA
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West Themis Law A Professional Law Corporation
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You have a lot of issues to work out. Bankruptcy may be an answer. But no attorney can give you that answer unless they fully evaluate exactly how much assets, how much expenses, income, disposable income, and other related issues that you actually have. A Bankruptcy attorney can help you work out something feasible to manage the debt you currently have.
Please talk to an attorney with bankruptcy experience. You are welcome to speak with my office.
Answered on Jan 20th, 2011 at 4:28 PM
Without telling me the balance due on the deed of trust, it is impossible to answer. However, I will assume that because you said it was your retirement that it is at lease $100,000. If that is so, you should not file chapter 7 as the trustee will take the asset from you to satisfy creditors.
Answered on Jan 20th, 2011 at 4:13 PM