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Bankruptcy Law

I recently spoke to Barrister about seeking...

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6 Jan 2013

I recently spoke to Barrister about seeking advice on whether I should file for bankruptcy-I am the one who owns the pet supply business. I wanted to ask him one other question and am not sure if this will reach him. He mentioned that in a Chapter 7 bankruptcy that all assets are liquidated and distributed to the creditors. Are these business assets or do they include personal assets also? Thanks-Pet Store Owner in Washington
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6 Jan 2013

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Bankruptcy Lawyer's response
6 Jan 2013
fran-moderator
fran-moderator
Hi, I am a Moderator with JustAnswer. I sent your requested Expert a message to follow up with you here, when they are back online. If I can help further, please let me know. Thank you for your continued patience.
6 Jan 2013
Bankruptcy Lawyer's response
6 Jan 2013
socrateaser
socrateaser
Hello, Different contributor here. The previous contributor is not qualified by this website to answer bankruptcy law questions -- apparently your question was inadvertently misdirected to the "real estate law" category. I have reviewed your previous question -- please permit me to assist. You asked: "Are these business assets or do they include personal assets also?" A: If your business is incorporated as a separate legal entity (e.g., Inc., LLC, LLP, LP), AND you have NOT signed any contract as a personal guarantor of the business, then you could file bankruptcy for the business and it would have no effect on your personal assets and liabilities. However, because a separate business entity can only be represented by a licensed attorney, and because business bankruptcy attorneys are generally more costly than consumer bankruptcy attorneys, many business owners in the situation I describe here, choose to simply close the doors on their business and leave the "shell" business insolvent forever, because the creditors cannot reach the owner's personal assets. Now, if you, like most people, have either not incorporated your business, or you have signed as a personal guarantor on your debts such as the property lease or credit cards, etc., then you are personally liable for those debts, and your only recourse is personal bankruptcy. What happens is that you place both your personal assets and liabilities into the hands of the bankruptcy trustee, and that includes your ownership interest in the business. The result is that your liability for the business and your personal debts are eliminated, to the extent that is legally possible. Certain personal debts are nondischargeable -- and certain personal assets are exempt from seizure by your creditors and/or the bankruptcy trustee. A list of bankruptcy exemptions can be found at this link: http://www.thebankruptcysite.org/exemptions/washington.html. A list of nondischargeable debts can be found at this link: http://www.nolo.com/legal-encyclopedia/nondischargeable-debts-chapter-7-bankruptcy.html I believe this covers your bankruptcy law questions. If you require further assistance, please open a new Q&A session and put my userid at the beginning of your new question ("To socrateaser") and I will happy to consider your next question. Best wishes and I hope this has helped clarify things for you.
6 Jan 2013
Customer reply
7 Jan 2013
Sorry. My computer sometimes has s mind of it's own. I was wondering about state taxes. If I have to file bankruptcy, instead of being able to walk away, can I add the quarterly and use tax to the bankruptcy, or should I pay what I can. Also, I researched on NOLO, like you suggested, and noticed that there is a residency "rule", I guess you would call it. I have only been living in Washington since May of 2011, my former residence, where my husband lives, is in California, where we own a home together. Would it be better for me to make sure I have stayed in Washington for the entire 2 year period, or should I file before that, again if I have to? Thank you for all of your help.
7 Jan 2013
Bankruptcy Lawyer's response
7 Jan 2013
socrateaser
socrateaser
Q: If I have to file bankruptcy, instead of being able to walk away, can I add the quarterly and use tax to the bankruptcy, or should I pay what I can. A: Sales tax, under Washington and Federal Bankruptcy Law, is a "trust fund tax," which is never subject to discharge. You cannot escape the tax in bankruptcy under any circumstance. Q: Also, I researched on NOLO, like you suggested, and noticed that there is a residency "rule", I guess you would call it. I have only been living in Washington since May of 2011, my former residence, where my husband lives, is in California, where we own a home together. Would it be better for me to make sure I have stayed in Washington for the entire 2 year period, or should I file before that, again if I have to? A: Unless you own real estate in Washington that you intend to declare as your homestead, then the California bankruptcy exemptions are probably superior to the Washington exemptions. However, it's a close call, so you may want to sit down with a local bankruptcy lawyer and conduct a more careful analysis of your specific circumstances -- before you make a final decision. Hope this helps.
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socrateaser
socrateaser
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Attorney and Real Estate Broker -- Retired (mostly)
7 Jan 2013
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