Greetings,and thank you for your time and efforts…My husband and my self were forced to close our business of twelve years,OCT 2008 we are sole owners and a S Corp.
Two years previous we noticed a significant decline in the economic spending habits, this decline forced us to use all our equity line of credit in our home. We were in good standing with our bank and had excellent credit. We were firm believers of not using credit for the obvious reasons. However,strongly believed this slump would pass and we would resume the profitable business status if we could keep afloat we worked so hard to get where we owned no debt on the business.
We made the decision to opt for the equity loan the interest rate was much lower and less complicated then a business loan. MY question SIR ,IS If we FILE bankruptcy, A grim yet real possibility due to the fact that we are still unemployed and our home in preforecloser, Is it possible to use the 2nd mortage (equity loan) that was used to pay off business creditors, taxes, invoices, payroll, building lease etc….would that loan be stripped? under a S CORP STATUS? money was borrowed and used for business expenses We used this loan with the intentions of paying it back when the business picked up.
This much higher mortage payment is why we are losing our home. We can manage the original mortage payment of $159,000 with selling family antiques off and odd jobs however, the 2nd mortage on our home is around $195000 The estimated value on our home is maybe $295000 We have incured a visa debt of $30,000 $8000 was used for mortage payments what would be our best options? Thank you so much for your generous time.
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The AnswerWe Were Forced to Close Our S Corp Business. - Jean by Steve Rhode