When should I talk to a Bankruptcy attorney?

Over the years, most business clients come in for a consultation when they are at the end of the line, making the prospect of reorganizing and surviving with the the current business more difficult.  There are warning signs you should watch for early on that should prompt you to seek professional advice sooner, including:

  • The failure, even once, to make a payroll or sales tax deposit.
  • First-time failure to pay off a monthly credit card that was used to cover normal operating expenses.
  • Unilateral decisions made by a co-owner or partner to make a large expenditure where there is disagreement.
  • Loss of a major client.
  • A lawsuit.

If you have consumer debt, most people who come in for an appointment know that they are at the end of the line.  Over the course of my practice, most often, the client who made the appointment was correct that it was time to file bankruptcy.

Will people know if I file bankruptcy?

In a business, the answer is almost always ‘yes.’  However, the stigma of bankruptcy has vanished as a result of this era’s economy.  Many businesses who have filed have creditors who are in bankruptcy or are filing because their customer filed.

Can I “not file” on some creditors?

All creditors who are owed must be listed.  Accounts with zero balances do not have to be listed.  However, it is critical to seek legal advice prior to making major payments to creditors in contemplation of bankruptcy.

Will I have to file bankruptcy, or can just my spouse file because he is the one with all of the debts?  Can just the business file and not me personally?

Who files will depend on several issues, including the existence of personal guarantees, who is listed on a credit card account, and other questions.  Every case is different.  It is important that you initially consult with a Bankruptcy lawyer, who can give legal advice as to liability for debt, the potential for exemption of assets and the impact of bankruptcy by a spouse or business.  For married couples, you always have to count the income of your non-filing spouse to determine whether you qualify even if your spouse does not file.  This means your spouse can still be unaffected, however, we will need to know all sources of family income.

What is the biggest mistake I can make prior to seeking bankruptcy advice?

Without a doubt, it’s the transfer of assets or payment of money to “insiders,” who include family members, partners, affiliates and other persons or entities close to the debtor.  Do not transfer assets thinking you can then come to bankruptcy court owning nothing. In a consumer bankruptcy, your case will fly largely under the radar with little or no public knowledge.  In Bakersfield, there is a small publication called ‘The Daily Report’ that lists all lawsuits filed, real property recordings, notices of mortgage defaults and trustee’s sales, and yes, Bankruptcy filings.  However, The Daily Report has a small circulation and is read by a limited number of people.

Max Gardner 661-888-4335