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LLC Bankruptcy question Arizona

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  • LLC Bankruptcy question Arizona

    A friend who is a small business owner approached me about the possibility of filing bankruptcy for his business.

    His question was whether or not an LLC will qualify for Chapter 13, he does not want to participate in Chapter 11 and honestly for the cost I can't blame him.

    Does anyone know if an LLC is elegible? From my research it appears possible, but I am simply not certain.

    Any help is appreciated.
    Not everything in America is actionable in a court of law. Please remember that attorneys are in business for profit, and they get paid regardless of whether or not you win or lose.

    I offer my knowledge and experience at no charge, I admit that I am NOT infallible, I am wrong sometimes, hopefully another responder will correct me if that is the case with the answer above, regardless, it is your responsibility to verify any and all information provided.

  • #2
    CatBert, per my bankruptcy reference book no, not as a LLC. I did a quick google search & came up with this:

    http://www.fireworkszone.com:80/busi...ankruptcy.html

    To file a Chapter 13 bankruptcy case, you must be an individual or a husband and wife filing jointly. If you own a business as a sole proprietor or partner, you can include all business debts on which you have personal liability. You have to file your case in your name, however, and not in the name of the business, because a business cannot file for Chapter 13 bankruptcy. On your bankruptcy papers, you will need to list all fictitious business names or DBAs (“doing business as”) that you have used as a sole proprietor or partnership.As with Chapter 7 bankruptcy, if you operate your business as a sole proprietorship or in a partnership with your spouse, or another party, you, or you and your partner, are personally liable for the debts of the business. For bankruptcy purposes, you and your business for your share of a partnership are one and the same. You can include all of the business debts in your Chapter 13 bankruptcy case. There is one exception: stockbrokers and commodity brokers cannot file a Chapter 13 bankruptcy case, even for personal, not business debts.

    **You cannot file a Chapter 13 bankruptcy on behalf of a corporation, limited liability company (L.L.C) or partnership as such. If you want to file a reorganization bankruptcy in that situation, you must file a business Chapter 11 bankruptcy, which is beyond the scope of this book.You do not qualify for Chapter 13 bankruptcy if your secured debts exceed $1,010,650 or your unsecured debts are more than $336,900. You will have to offer evidence that you have filed your federal and state income tax returns for the four tax years prior to your bankruptcy filing date. This evidence can be provided by the returns themselves or by transcripts of the returns obtained from the IRS. You have to provide this evidence no later than the date set for your first meeting of creditors about a month after you file. The trustee can keep the creditors meeting open for up to 120 days to give you time to file the returns and the court can give you an additional 120 days.

    Your friend might want to talk to a bankruptcy attorney. Betty3
    Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around. Leo Buscaglia

    Live in peace with animals. Animals bring love to our hearts and warmth to our souls.

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    • #3
      I went ahead & called my sister-in-law. She is retired now but worked for an attorney who did bankruptcy cases. She said no - not as a LLC. (no C. 13)
      Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around. Leo Buscaglia

      Live in peace with animals. Animals bring love to our hearts and warmth to our souls.

      Comment


      • #4
        Okay...he won't be happy to hear that, but those are the breaks.

        He is aware that I filed Ch 7 recently and considered Ch 13. so I suppose I am supposed to be the 'expert' now.

        Thanks for the help!
        Not everything in America is actionable in a court of law. Please remember that attorneys are in business for profit, and they get paid regardless of whether or not you win or lose.

        I offer my knowledge and experience at no charge, I admit that I am NOT infallible, I am wrong sometimes, hopefully another responder will correct me if that is the case with the answer above, regardless, it is your responsibility to verify any and all information provided.

        Comment


        • #5
          You're certainly welcome for the help. I hope things work out for your friend.
          Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around. Leo Buscaglia

          Live in peace with animals. Animals bring love to our hearts and warmth to our souls.

          Comment

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