What happens to a person's credit if they have to file bankruptcy for an S-Corp or LLC?
I'm looking at having to close a couple of my small businesses. Due to my landlord's going to want to bury me in the ground with unpaid rent, I am looking at filing bankruptcy rather than just closing the doors.
I can update this with more info if needed.
Posted Nov 26, 2019, 3:23 PM UTC
Depends on whether the loans are guaranteed by you personally or cross collateralized with personal assets
I don't have loans but I have my leases guaranteed personally.
Then a BK won't save you unless you declare personally too
You generally have two options for a small business.
Chapter 7. All of the assets are collected, liquidated, and creditors paid from the proceeds. You then close the business.
Or
Chapter 11. Reorganization. You file a plan on how you’re going to repay your creditors. They vote if the plan is fair, you follow the plan and keep the business if your creditors agree. CH11 is extremely rare for a small business to succeed with.
Neither option will do anything with your personal credit UNLESS you have personally guaranteed anything involved with the business. Then you’re just as liable as the business and the creditors can peruse you personally which you’d need to then file a personal bankruptcy if you can’t pay out of pocket.
I don't have loans but I have my leases guaranteed personally. What would I be looking at from them coming after me personally if I don't have any other assets?
I'm confused. Your businesses aren't making enough money to cover rent, but you want to keep them operating?
No I do not want to keep them operating