Legal Question in Bankruptcy in California

Re: Personal bankruptcy with LLC and business debt

Sounds like you'll need a bankrputcy attorney to review what you have before advising you--some answers require further information. If you've made personal guarantees, you'd need a personal bankruptcy to discharge them. You may also want to consider negotiating the debts, as this may be a better option to avoid possible bankruptcy trustee control of your business and there'd be no court notices sent to your clients. Whatever you do, consult with an attorney soon, as some judgments may be difficult to avoid in bankruptcy court if you wait.

Re: Personal bankruptcy with LLC and business debt

If you only have one remaining client, I don't see how filing for bankruptcy or terminating the LLC is going to paralyze your future. Nonethless, you can amend the operating agreement of a single-member LLC at anytime. Personally, I rarely ever advise clients to do business as an LLC because corporations are usually more flexible in reducing your tax liabilty.

If you file for Chapter 7, the trustee is entitled to control all of your nonexempt assets. Your ability to exempt your interest in the LLC depends on a number of factors that include the amount of your debt, the value of your LLC and the likelihood that a buyer could be found to buy your LLC so that debts could be paid.

Depending on your debt load and income, you might need to file a Chapter 13 repayment plan instead if you need to preserve ownership of the LLC. The level of detail need to answer your question really requires a consultation with a qualified bankruptcy attorney.

I do not know any bankruptcy attorneys in your area, but you I have an article on my website that provides some tips on selecting an attorney:

http://www.chs-law.com/2005/07/how-can-i-find-good-lawyer.html

Re: Personal bankruptcy with LLC and business debt

Filing a bankruptcy for your LLC is not going to deal with any personal liability that you have, so unless you do want the LLC to stop doing business, you would only file a personal bankruptcy. Your interest in the LLC would be an asset in your personal case and, depending on what the value of your interest is, you may or may not be able to exempt it. It may be that a Ch. 13 would be a superior means to deal with your problem. If you'd like a consultation to better assess your situation, please visit my webpage at http://www.bklaw.com/consultation.html and then contact me to schedule an appointment.