My wife and I may have to file Chapter 7. We are pretty clear on everything except for our business we use PayPal merchant services for credit card processing and we also have a loan with PayPal whereby they take 30% of all sales that we process through Paypal until it's paid off. We do not want to lose our ability to operate our business with PayPal merchant services so if we include the PayPal capital loan in the filing we may in fact do just that.
Is there a solution? What happens if we do not list PayPal Capital? If we do list them, could we do a reaffirmation? But from what I read that maybe a gamble as well.
2 Answers from Attorneys
This is a common dilemma. You must list the PayPal debt regardless. I have seen cases where PayPal stops allowing the merchant services, and others where they allowed it to continue after the bankruptcy filing. Reaffirmation is a possibility that can appease PayPal, but it is not an instantaneous fix. It takes several months to file the reaffirmation agreement and then obtain court approval of it. So in the meantime, you might be without the services.
In general, Chapter 7 is not designed for operating businesses so that may not be your best option anyway. You may want to do a Chapter 13 instead. In any event, it might make sense to find a different company to do business with for your merchant services before filing any bankruptcy case.
There are a lot of potential and complex issues here. Are you and your wife contemplating personal bankruptcy or a business bankruptcy? Is the business a sole proprietorship or LLC or S or C Corporation? Did you and your wife personally guarantee the PayPal account? Are your debts related to the business or are they ordinary consumer debts?
Due to the complexity of the issues presented, I highly recommend you consult with a local bankruptcy attorney for assistance. If you are not already working with an attorney, you can find one near you at www.nacba.org or through the local bar association.
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