Sally Provides More Information. Follow-Up.

“Dear Steve,

Dear Steve,

Thank-You for your last response. (See original question Are the S Corp and LLC Debts Debts Going to Cause Us to Lose Our Home? – Sally)

I think I didn’t explain enough which led you to think I was or we were not being responsible.

First off, my husband ran his business very successfully for almost 8 years of the 12 years of the time frame. It’s only been really bad for the last 3 years. As with every business that one starts and has a life’s worth of investment in, he obviously tried his best to save it at all costs.

Believing that he could undo the harm caused by a business partner who lied and cheated us and did not do what he was meant to on the marketing aspect. Hence 3 years ago when he let him go, he has been struggling to regain his lost customer base.

Family has helped because they had the same faith in my husband’s business as I did, It has supported us well for almost 25 years. The S Corp was established because we were making quite a bit of money and the accountant advised him to start the S corp 12 years ago. Anyway, the past is the past, in the process of saving it, we have spent all of our savings, and also gotten help from the family. Which they have willingly given as they know that my husband cannot do anything else and he has to make a go of it.

We think he has fixed the problems and corrected the mistakes that were made in the past. If it was not for this downturn in the economy we know that it would turn around. We are confident that it will, and he has started to earn just enough to pay the bills without help. If the Creditors would have given him more time, he would not have considered bankruptcy. As it stands, he seems stuck.

He has been operating under an LLC, and my question was could he go bankrupt with the S Corp and still retain and work under his LLC? The Vendors also have faith in him and are not chasing him.

It’s just the unsecured debt from the CC and the Bank’s line of Credit who don’t want to hear him out and have set the collection agencies on him! Total Debt $87,000.

My next question is, if they get judgements against us, is that better than bankruptcy as in the long term? because he might be able to pay them off in 3 years….. It’s a might and not a definite, because I am not being too optimistic with this economy! What I can say is that we can survive without borrowing more from our family. It’s just the CC debt that my husband is carrying.

Offsetting that will give us breathing room. Unless you tell me that he cannot keep his LLC and all his bank accounts will be cancelled. How will he operate if that happens? There is one CC that we have jointly that he thinks he can offset in his bankruptcy, but I know they will come after me for it, which I can make payments on, along with my other cards that I pay, with help from my family.

The house being in my name with my father, he does not want me to go bankrupt. Oh and finally if these unsecured debts are not joint, can they try to come after my assets? What about furniture in the home? We have had it for 20 years and not bought it on the CC’s. Thank-You again for your help, We are NYS residents.


Dear Sally,

Thank you for all the additional information.

The unfortunate events of the past do not change the situation your husband is in today. The situation today is one where he is being pushed or forced down a path that he might not want to go down. But then again, he’s not driving this bus, the creditors are.

I stand by my previous advice that he needs to go and speak with a bankruptcy attorney. At that meeting he needs to and ask all his technical LLC, S corp questions and get the best advice possible to address the present situation. You should go to that meeting with your husband and listen to what the attorney has to say.

Only armed with that information will you be able to make an informed and educated decision about what path is right for you. There is no reason why he has to go bankrupt but without some input or change from your husband, the creditors are still driving the bus and picking the route. You guys are just along for the ride.

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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