Legal Question in Bankruptcy in Utah

Business after Bankruptcy?

Me and my wife have recently filed personal chapter 13 bankruptcy. I am currently self employed and have a LLC partnership with a friend. I have an investor that likes my ideas and wants to invest in a new business with me. My questions are:

1. Lets say the business (My Current LLC) is profitable by the end of the year, and we have plenty of money in the business account. Will I have to pay my share of that money to the court, or can I leave it in the account to support the business, and keep taking out what my chapter 13 budget has listed as my pay.

2. Can I form a new corporation while in Chapter 13

3. Can I start a new business while in chapter 13

4. Can I get my debts discharged early if I have the money to pay them off?

We had no choice at the time.... but now there is options that could get us back on track... I wish we would of waited a month longer....


Asked on 4/04/02, 9:14 pm

1 Answer from Attorneys
Alvin Lundgren Alvin R. Lundgren, L.C.

Re: Business after Bankruptcy?

I will assume that your LLC is taxed as a partnership. At the end of the year it will issue a K-1 to you reflecting your share of profit (or loss). If you earn a substantial income you should modify your Ch 13 plan to pay a higher percentage to your creditors. If you are taxed as a corporation then the LLC can retain capital for future growth and pay you a salary. You can start new business entities while in Ch 13.

You can always dismiss your Ch 13 and recommence paying your creditors if you have sufficient income. Then although you have filed bankruptcy you will not have been discharged in bankruptcy - there is a difference on your credit. Another choice is to pay all of your creditors all that they are owed through the Ch 13 and complete the plan early. A Ch 13 plan typically goes for 3 years or until all creditors are paid in full, which ever comes first.

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Answered on 4/05/02, 8:39 am


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