I own a business that is no longer conducting any business. The business is a subchapter S in PA. It was successful for a while and then in 2007 I seized all operations as there were no sales and income ended. In 2004 I had a taken a line of credit for $65000 and as I was using the entire line, I was paying interest each month until now. My husband and I are both unemployed and we have been making the minimum interest payments on this loan and are in good standing. The monthly interest is about $265. The bank however just sent a notice few weeks back and want me to start repaying the principal. They have setup a payment plan to pay back $1000 of principal per month plus interest. As I am still unemployed with no income, I am not able to afford this high of a payment. What is my recourse. I personally guaranteed the loan. I live in a house co-owned with my husband. The house has no equity left either.
2 Answers from Attorneys
When you are in a situation in which it is difficult or impossible to repay your debts, you have several options. One is to negotiate with your creditors. However, that is time consuming, uncertain and possibly pointless if you do not have the ability to pay them. The second option is to ignore the debt. The creditors will hassle you, possibly sue you and could seize your assets and bank accounts. The third option is bankruptcy.
There are two types of bankruptcies for consumers, Chapter 7 and 13. The former is generally for those who simply require the elimination of unsecured debt such as credit cards. The latter is generally for those who have fallen behind in secured debt such as a mortgage. Chapter 13 allows you to repay any arrears over five years.
In each case, the filing of the bankruptcy creates what is known as an automatic stay. That prevents any creditor from taking any action whatsoever. They cannot call you, write you or sue you. Moreover, once we are retained, you can tell anyone who contacts you to contact us and that should provide you with some relief. Ultimately, when you receive a discharge order, the automatic stay becomes permanent.
Rest assured, I will provide you with clear and simple advice and information. If you call me and reach my voice mail, please feel free to leave a message as all calls are confidential.
Please note that distance is not an issue, because we donít have to meet unless you want to and virtually all issues can be addressed by phone, e-mail or mail.
Feel free to contact me at your convenience.
Very truly yours,
Matthew R. Nahrgang, Esquire
35 Evansburg Road
Collegeville, PA 19426
(610) 489-3041 ph
(610) 489-3042 fax
I own a business that is no longer conducting any business File for bankruptcy
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