If a person delcares personal bankruptcy what affect will that have on there buisness. ?
admin | Mar 30, 2010 | Comments 3
My sister in law is thinking of declaring bankruptcy. I’m concerned about this because I hold two rental properties with her. We are holding the homes in an LLC. So I reckon were okay but just sought after to double check. Is there anyway that the creditors could come after the business’s assets?
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the LLC should protect your assets. that is what it was designed to do in the initially house. make sure she files a personal bankruptcy if doable, leaving her business side out of it. please remember that these greedy creditors follow changes in laws, and they are always looking for angles to come after your assets. today they may not be able to come after the rental properties but next year a law change may allow them to go after the properties. it is wise to change the properties out of her name as soon as time permits to protect you in the future as well. excellent luck.
I’m not an attorney, so seek competent legal counsel for a touch this significant. There may be a emancipated bankruptcy legal bolster office in your area that can give you some guidance.
That being said, I believe if the rentals have loans and your sister personally guaranteed those loans, there may be an opening for the banks. Also, if either of you have done anything to “pierce the corporate veil” like commingle personal and business funds or assets, you may be at risk.
Again, talk to an attorney to make a clear answer before proceeding.
Her creditors can’t come after business assets directly, but her share of the business is a personal asset. Unless you are prepared to buy her out, you could find you have a new partner in the business.