Legal Question in Bankruptcy in Minnesota

Some of our unsecured credit cards have our name on them and also a business name. an LLC . Will this be handled differently in bankruptcy than the rest?

Asked on 1/10/15, 9:34 am

2 Answers from Attorneys

David Kelly-952-544-6356 Kelly Law Office

Well, as with a lot of other legal questions the answer is "that depends."

I would want to review some of the statements for those accounts and also the paperwork from when you applied for the cards in question. I suspect what I will see would be that these accounts are set up to be liabilities both of you as an individual and of the LLC as well.

Most of the time when somebody with an LLC gets to the door of my office, the LLC is already out of business. The LLC exists in name only and has no business and no assets. In that situation I usually recommend that a bankruptcy be filed only for the individual and not for the LLC. Filing a bankruptcy for the LLC would probably be a wasted effort and expense if it is nothing but an empty shell.

So we file a bankruptcy for the individual only. We would list the LLC as a codebtor in that case, and we would also in the heading of the case say that the individual is filing "as surety for" the LLC. In answer to the questions on the petition about businesses, we would explain that there used to be this LLC but it's gone now. Outside of those few notations, the bankruptcy will not be much different than any other case.

If the LLC is still in business, there's a problem because the creditors can still go after the LLC after the individual bankruptcy is done. Probably time to bring that LLC to the vet and have it put to sleep humanely before filing the individual bankruptcy.

This answer is no substitute for a real consultation with a lawyer. It is for information purposes only, is not legal advice, and does not create an attorney-client relationship.

I am a debt relief agency. I help people file for relief under the federal bankruptcy code.

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Answered on 1/10/15, 11:17 am
Sam Calvert Calvert Law Office

Theoretically, the LLC is a separate legal person from you. If you file bankruptcy, your bankruptcy will not discharge the possible liability of the LLC.

I would want to know if the LLC is active, and whether it has any assets. THe answers to those questions will affect how you handle the case.

Bankruptcy can be complicated; I hope you are using an attorney to help you navigate the issues.

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Answered on 1/11/15, 3:26 pm

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