Legal Question in Bankruptcy in Texas

Business Bankruptcy & Personal Bankruptcy

My partner (not my husband) and I own a small business (an S-Corporation) and there is a strong possibility that we may have to declare bankruptcy. We don't own much in the way of equipment, most of it is leased (there is a CD as collateral) and we have an SBA loan that will not be paid off (there is a CD as colateral). There will be numerous debts and we have incurred personal debts along the way, some credit card debt also. My question: If we file bankruptcy through the company, will the creditors come after us personally for payment or will we have to file bankruptcy personally. And if we do have to file personal bankruptcy, can I file singlely and will the creditors go after our home or my husband to pay the debts? My husband's name doesn't appear on any legal documents and he has had nothing to do with the business.


Asked on 1/11/03, 10:17 pm

2 Answers from Attorneys
Andrew Nichols Law Office of Andrew B. Nichols

Re: Business Bankruptcy & Personal Bankruptcy

The biggest factor as to whether the creditors will pursue you personally is whether you made personal guarantees as to the loans. If not, the corporation's debts cannot be collected through your personal assets. (After all, isn't that why we incorporate?) If you later file for personal bankruptcy your home would be protected as would almost all of your personal property. Please feel free to call me to discuss your situation in more detail. ph. (214) 979-7330 or (800) 303-0720

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Answered on 1/15/03, 11:35 am
Lawrence Maun Lawrence J. Maun, P.C.

Re: Business Bankruptcy & Personal Bankruptcy

Your business corporation and you individually are seperate legal entities. Your copration bankruptcy filing does not create liabilites for you as a shareholder. However, if you have personally guaranteed debt, or are a co-debtor, the filing of a bankruptcy in the corp. will cause the creditors to look to you for payment. If you file individual bankruptcy, the creditors can look to you non expempt individual assets as well as non exempt community property assets, but not your husbands seperate assets. In Texas you homestead is exempt as is $30,000.00 of personal property, and several other categories of assets, i.e. retirement plans. However, thses assets are not exempt from federal tax liens. Additionally, if these exempt assets serve as collateral for a loan, the loan will have to be paid to preserve the asset. Call to discuss if you wish. Larry Maun 713-266-2560

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Answered on 1/12/03, 12:27 pm


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