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Business closed, been hanging on too long...


StuffFromDennis
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Hi everybody,

 

I had a business from 1999 to 2012 or so. The business remained profitable enough but I did fail some government inspections, we lost some licenses, and I had to close and cannot reopen. In the course of doing business, I racked up approximately $25,000 in personal credit card debt, $12,000 in unsecured business credit card debt, and probably significantly contributed to my girlfriends $30,000 in credit card debt. She's lived with me for the past 3 years.

 

We're just barely scraping by after making minimum payments on all our bills each month and this month we had almost been unable to pay for electricity and food. So we've come to the point where we're making some decisions to move past this.

 

She's filing bankruptcy under chapter 7. She owns no house or substantial assets and should be able to wipe that clean.

 

While I have $0 in the bank, I do not think I am the best candidate for BK as I do own a building that was operating the business free and clear. Right now the building is empty and mostly a liability (property tax each year) but I don't want to lose it.

 

So what happens if I stop making these unsecured business credit card payments? They are the usual types of cards discussed here in this forum. HDMC, Staples, etc. I don't have much of a choice at the moment as I have about $1,000 in payments due the first week of next month (next week) and I am already late on two business payments from this month. Even if I get sued and eventually have to make the business payments or settle, I can't pay them now so I'm evaluating my options. One thing to note is that they are all NOT personally guaranteed. But I do own the business (sole proprietor)

 

The creditors have been charging me very high interest rates for years. I haven't even made any new charges in any substantial amount in years. The balances just don't go down much with interest. I'm sure they've made their profit at this point. The business has been closed for years and I've been trying to keep up with those payments but we've been really struggling. How responsible am I for this business non-personally guaranteed debt?

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Hi everybody,

 

I had a business from 1999 to 2012 or so. The business remained profitable enough but I did fail some government inspections, we lost some licenses, and I had to close and cannot reopen. In the course of doing business, I racked up approximately $25,000 in personal credit card debt, $12,000 in unsecured business credit card debt, and probably significantly contributed to my girlfriends $30,000 in credit card debt. She's lived with me for the past 3 years.

 

We're just barely scraping by after making minimum payments on all our bills each month and this month we had almost been unable to pay for electricity and food. So we've come to the point where we're making some decisions to move past this.

 

She's filing bankruptcy under chapter 7. She owns no house or substantial assets and should be able to wipe that clean.

 

While I have $0 in the bank, I do not think I am the best candidate for BK as I do own a building that was operating the business free and clear. Right now the building is empty and mostly a liability (property tax each year) but I don't want to lose it.

 

So what happens if I stop making these unsecured business credit card payments? They are the usual types of cards discussed here in this forum. HDMC, Staples, etc. I don't have much of a choice at the moment as I have about $1,000 in payments due the first week of next month (next week) and I am already late on two business payments from this month. Even if I get sued and eventually have to make the business payments or settle, I can't pay them now so I'm evaluating my options. One thing to note is that they are all NOT personally guaranteed. But I do own the business (sole proprietor)

 

The creditors have been charging me very high interest rates for years. I haven't even made any new charges in any substantial amount in years. The balances just don't go down much with interest. I'm sure they've made their profit at this point. The business has been closed for years and I've been trying to keep up with those payments but we've been really struggling. How responsible am I for this business non-personally guaranteed debt?

The first thing your not understanding or I'm missing is your a sole prop so any credit you have under the business even if you didn't give them a "PG" is PG'd no matter what. That means any assets you have are open game for any creditor to come after especially the buidling. Your right BK wouldn't be a option for you because you would be forced to sell the building.

 

Best advice don't pay the smaller store biz accounts you have and try to keep up with the larger accounts. Hopefully the smaller accounts won't dig so much to see what you have but the larger accounts most likely will. But either way if start defaulting creditors will look and find your assests.

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Hi everybody,

 

I had a business from 1999 to 2012 or so. The business remained profitable enough but I did fail some government inspections, we lost some licenses, and I had to close and cannot reopen. In the course of doing business, I racked up approximately $25,000 in personal credit card debt, $12,000 in unsecured business credit card debt, and probably significantly contributed to my girlfriends $30,000 in credit card debt. She's lived with me for the past 3 years.

 

We're just barely scraping by after making minimum payments on all our bills each month and this month we had almost been unable to pay for electricity and food. So we've come to the point where we're making some decisions to move past this.

 

She's filing bankruptcy under chapter 7. She owns no house or substantial assets and should be able to wipe that clean.

 

While I have $0 in the bank, I do not think I am the best candidate for BK as I do own a building that was operating the business free and clear. Right now the building is empty and mostly a liability (property tax each year) but I don't want to lose it.

 

So what happens if I stop making these unsecured business credit card payments? They are the usual types of cards discussed here in this forum. HDMC, Staples, etc. I don't have much of a choice at the moment as I have about $1,000 in payments due the first week of next month (next week) and I am already late on two business payments from this month. Even if I get sued and eventually have to make the business payments or settle, I can't pay them now so I'm evaluating my options. One thing to note is that they are all NOT personally guaranteed. But I do own the business (sole proprietor)

 

The creditors have been charging me very high interest rates for years. I haven't even made any new charges in any substantial amount in years. The balances just don't go down much with interest. I'm sure they've made their profit at this point. The business has been closed for years and I've been trying to keep up with those payments but we've been really struggling. How responsible am I for this business non-personally guaranteed debt?

 

>The first thing your not understanding or I'm missing is your a sole prop so any credit you have under the business even if you didn't give them a "PG" is PG'd no matter what.

 

 

 

Thanks. I do actually understand enough that I'm seeking advice here and agree. I do note that none of these have ever appeared on my personal credit reports in any way. The largest amount is approximately $5k (a well known Mastercard in this forum that starts with a K) and I have fallen behind enough that there have been no payments on it for approximately 3 months. To be honest, I'm surprised how little I've heard from them. The next highest balance is HDMC at about $3.5k. Everything else is like $1.5k-3k per card. I thought about cherry picking as you suggested but some of the smaller cards are connected to the same creditor as the larger cards. I'm guessing eventually all of the accounts connected to the business will be closed by the creditors once some of them start looking bad enough.

 

 

Edited by StuffFromDennis
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That's correct. I purchased the business including building and assets for $50k back in 1999. Maybe $30k or so for the business and land? Not really sure. It's a cinder block building on a couple of acres of land.

Sorry to hear about your situation OP..

 

Is this building generating any income for you? I believe you said no, correct? Does it have potential to generate income? If not, how much can it help you if you sold it? Can you sell it?

 

Most important question for me is: Are you making the decision to keep this building with your heart and not your brain? (not trying to be offensive in any way, I just know many people make emotional decisions, which can be very dangerous)

Edited by GR8WhiTE
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Here was my thinking..

 

Rent it out if possible.

Sell it.

Borrow against it.

 

If you really want to keep it then you need to protect it from creditors if your going to default. A couple ways of doing that are.. Set up a Corporation with another close family member and sell the building to the company for a $1 and it now becomes the companies property. The other way would be to set up a trust. Either way there is some risk if it really came down to it a court could take it from a company or trust if it appears your just hiding it but that is why I mentioned a family member or some one really close to you to add onto the company. It makes it considerably harder and less likely for that to happen. Single member companies have their corporate protection broken mor often then multi member businesses.

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Hi,

 

Thanks for the suggestions. I do understand the emotional attachment issue that someone brought up as well. I would consider renting it out, or selling it. I just don't want to lose it for no reason after everything else. I do have a different unrelated business idea I've been wanting to try too. I just am pretty paralyzed now with all that past debt so I can't do much of anything.

 

So the suggestion here to start a corp and sell the building to it sounds like a good next move maybe.

 

It also just isn't possible right now but settling for a percentage somewhere later could maybe be a serious option here if it goes that far that anything court related enters the picture. My main thoughts are that I can't take care of them as-is right now and of course I'd prefer they not be on my personal credit report (I remember reading someone else here dispute these types of cards off their report as non-PG).

Edited by StuffFromDennis
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Here was my thinking..

 

Rent it out if possible.

Sell it.

Borrow against it.

 

If you really want to keep it then you need to protect it from creditors if your going to default. A couple ways of doing that are.. Set up a Corporation with another close family member and sell the building to the company for a $1 and it now becomes the companies property. The other way would be to set up a trust. Either way there is some risk if it really came down to it a court could take it from a company or trust if it appears your just hiding it but that is why I mentioned a family member or some one really close to you to add onto the company. It makes it considerably harder and less likely for that to happen. Single member companies have their corporate protection broken mor often then multi member businesses.

great advice

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Hi,

 

Thanks for the suggestions. I do understand the emotional attachment issue that someone brought up as well. I would consider renting it out, or selling it. I just don't want to lose it for no reason after everything else. I do have a different unrelated business idea I've been wanting to try too. I just am pretty paralyzed now with all that past debt so I can't do much of anything.

 

So the suggestion here to start a corp and sell the building to it sounds like a good next move maybe.

 

It also just isn't possible right now but settling for a percentage somewhere later could maybe be a serious option here if it goes that far that anything court related enters the picture. My main thoughts are that I can't take care of them as-is right now and of course I'd prefer they not be on my personal credit report (I remember reading someone else here dispute these types of cards off their report as non-PG).

Dispute as non PG won't work when your a sole prop. That often doesn't work even when you have a corp when dealing with certain banks like Citi.

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So whats the best way to keep these off personal reports? The one that's months late hasn't shown up yet. Only a matter of time? Or?

 

Any online companies that are good about lending money based mostly on a building/property where I could consolidate these into one smaller monthly payment or something? $12k doesn't even seem impossible to repay. I'd love to be rid of it but either way, it's just too much right now. This business has been around since 1979 under different owners. It had a bad period in the 80's under different ownership after a lightning strike/fire. When I've gone to local smalltown banks in the past, they tell me they've already owned it/foreclosed on it once back then and don't have any interest in owning it again... I couldn't even get a loan on the building in this area for like $2k-$3k. Just nothing.

 

My personal credit looks stable (no lates) but strained due to utilization. It doesn't help my case that anything I make is self employment income and I haven't set anything up as a regular salary so no paystubs, etc. I've just been reinvesting all back into business for too long. I'm trying to get out somehow.

Edited by StuffFromDennis
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Masking the names here a bit to maybe prevent this from showing up as obviously in searches... if anyone has specific experience with what might happen with accounts from these specific retailers, would appreciate hearing it (possibility of settlements/pay-for-delete type things, etc). Please let me know if someone thinks I shouldn't be this detailed and should erase this post for some reason.


Sta-s (office supply store) $2100

HDM (hardware store Mastercard) $3500

A-n (online book store) $1700

WM (huge retailer from Arkansas) $1700

OffD (another office supply) $2700

KeB (Bank Mastercard) $5000


I guess the business total is $16700 actually, not $12k. Remember the problem is that these combine with my personal credit card debt ($22k). And then until now has combined with my girlfriends debt. That's where I've been feeling overwhelmed. Advice still appreciated :)

Edited by StuffFromDennis
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Remove the building from you owning it. Transfer the deed ASAP to a corporation or trust. You should never own property besides your homestead in your personal name, especially business property. By doing that it will prevent creditors from attaching the building and forcing sale to satisfy your debts. If you file bk they may find it or they may not.

 

 

Sent from my iPhone using Tapatalk

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Masking the names here a bit to maybe prevent this from showing up as obviously in searches... if anyone has specific experience with what might happen with accounts from these specific retailers, would appreciate hearing it (possibility of settlements/pay-for-delete type things, etc). Please let me know if someone thinks I shouldn't be this detailed and should erase this post for some reason.

 

Sta-s (office supply store) $2100

HDM (hardware store Mastercard) $3500

A-n (online book store) $1700

WM (huge retailer from Arkansas) $1700

OffD (another office supply) $2700

KeB (Bank Mastercard) $5000

 

I guess the business total is $16700 actually, not $12k. Remember the problem is that these combine with my personal credit card debt ($22k). And then until now has combined with my girlfriends debt. That's where I've been feeling overwhelmed. Advice still appreciated :)

All those cards are run by major banks. So just like other major banks dealing with them won't be easy. You would most likely get offered settlement amounts but if they know you have assets you may not. Get the building out of your name sooner then later like know. It will make what ever your going to do easier.

 

Some times it takes a whole for business debt to hit your personal reports but it will hit.

 

How much is the building worth? I can't believe you couldn't get a loan for $3k off it.

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Thank you again for all advice and I will proceed with doing what I can do for the building this week.

 

I don't really know what the building is worth. I paid $50k for the building and assets in an operating business back in 1999. It's the only business on a residential street and it sits on 2 acres of land. The entire rest of the street is filled with homes. It'd likely be worth more if someone got rid of it and put 2-3 homes in it's place if that's allowed.

 

Maybe I'll try approaching banks again. I do have two home mortgages tho along with all of the other mentioned debt. Basically I don't think I'm in a position anymore where people are going to give me loans under most any conditions.

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Thank you again for all advice and I will proceed with doing what I can do for the building this week.

 

I don't really know what the building is worth. I paid $50k for the building and assets in an operating business back in 1999. It's the only business on a residential street and it sits on 2 acres of land. The entire rest of the street is filled with homes. It'd likely be worth more if someone got rid of it and put 2-3 homes in it's place if that's allowed.

 

Maybe I'll try approaching banks again. I do have two home mortgages tho along with all of the other mentioned debt. Basically I don't think I'm in a position anymore where people are going to give me loans under most any conditions.

Think with your head and not your heart. If you have no use for the building then sell it. That would put you in a better financial position then taking on another loan even though your paying off other debt.

 

Good luck!

Edited by BRBiz
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Your best bet is to sell the building.

Don't try and set up a trust and drag a close friend or family member into this mess.

These maneuvers are not good ideas if you're insolvent. A determined creditor can use your states Fraudulent Transfer Act to unwind the transaction. I've seen this done more than a few times. Many states have a 4 year statute of limitaions on these types of transfers.

Don't do it unless a lawyer signs off on it.

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Your best bet is to sell the building.

Don't try and set up a trust and drag a close friend or family member into this mess.

These maneuvers are not good ideas if you're insolvent. A determined creditor can use your states Fraudulent Transfer Act to unwind the transaction. I've seen this done more than a few times. Many states have a 4 year statute of limitaions on these types of transfers.

Don't do it unless a lawyer signs off on it.

I don't see this even being a possibility with so little debt involved. The amount of work/money needed to prove this in court just wouldn't make sense for any creditor he currently owes. Not exactly easy to prove either and if you properly setup a new company and sell the property to the new business it makes it even harder if not impossible to prove any sort of fraud. Also considering its a commercial property to be used in a new business venture just adds some more security to it. Now if you transferred your personal home into a trust or business then I could see that bringing upon the above mentioned issue again if large soles of debt were involved.

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Actually, it's pretty easy to prove.

I was a banker years ago and we had people try this from time to time. We never lost.

Our states Uniform Fraudulent Transfer statute reads "any attempt to delay, hinder or, defraud a creditor". It's hard to defend a transfer like this to a friend or family member when you're insolvent and you don't get fair economic value for it {sale to an insider for $1}.

 

Whether a creditor will pursue it or not-who knows. We've all seen banks like Cap1 sue for small amounts just because they can.

I'd just caution against getting family involved in the OP's financial problems and for sure ask a lawyer what they think about this idea.

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Actually, it's pretty easy to prove.

I was a banker years ago and we had people try this from time to time. We never lost.

Our states Uniform Fraudulent Transfer statute reads "any attempt to delay, hinder or, defraud a creditor". It's hard to defend a transfer like this to a friend or family member when you're insolvent and you don't get fair economic value for it {sale to an insider for $1}.

 

Whether a creditor will pursue it or not-who knows. We've all seen banks like Cap1 sue for small amounts just because they can.

I'd just caution against getting family involved in the OP's financial problems and for sure ask a lawyer what they think about this idea.

I understand what your saying but when you keep yourself involved and add a business partner and the property becomes corporate property it becomes a very different story. I totally get if you simply transfer the property out of your name to friend or family member it's pretty obvious what doing.

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If you give the property to someone for a very cheap amount , you could run into problems with your bk, and, lying about it wouldnt be a good idea. They reveiw large transactions for the last couple of years, I believe. If you have this asset and cant ay the other debts, why not sell it and relieve yourself the stress and avoid bk?

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If you give the property to someone for a very cheap amount , you could run into problems with your bk, and, lying about it wouldnt be a good idea. They reveiw large transactions for the last couple of years, I believe. If you have this asset and cant ay the other debts, why not sell it and relieve yourself the stress and avoid bk?

Selling isn't as easy as you think sometimes.

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If you give the property to someone for a very cheap amount , you could run into problems with your bk, and, lying about it wouldnt be a good idea. They reveiw large transactions for the last couple of years, I believe. If you have this asset and cant ay the other debts, why not sell it and relieve yourself the stress and avoid bk?

Selling isn't as easy as you think sometimes.

 

Exactly. I've had people come to me but they seem to think because it's closed I'm just going to give it to them. One man was talking about converting into a church and as soon as I started talking about money - even monthly payments - he was like "Great I'll call you tomorrow" and I never heard back.

 

Someone else gave me a rather extensive list of things they wanted which basically amounted to me making it an extremely successful business for them, then selling it for maybe half of what it's worth now dormant. Even if I had wanted to do this, obviously if I reopened it and built it up again and was successful, I'd operate it.

Edited by StuffFromDennis
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