As someone currently working with aging parents on their finances, I too offer props to what you are doing. It can be very frustrating. The good news is you were able to get agreement from parent to help and sign a DPOA. Something we are working on in our case.Resurrecting this thread to ask a few questions that have come up. Dad filed Chapter 13 bankruptcy in December.
He might have personal liability for a variety of business accounts. The ones that jump to my mind the most common ones would be business credit cards that are linked to his personal social security number as well as if he gave a personal guarantee when he signed a lease or a business line of credit or just anything like that is common for a small business owner to have their personal credit attached to somethin that was a true business expense. A lot of times a small business doesn't really have its own credit history and so the owner has to guarantee things personally and you would have to look at those all those contract terms to know his exposure.
Closing a business, even an insolvent one doesn't mean the business needs to file a bankruptcy. You can kind of just wrap things up and as long as you make sure that you've paid taxes that done your final tax returns right paid sales tax and employment taxes staying in federal. Whatever is required. You don't have to worry about filing a bankruptcy or the rest of the day when it's coming after you later once the phones and mail have been disconnected and you don't have the location anymore. Except to the degree that you personally guaranteed something and that's where the personal bankruptcy Is helpful.
1) Am I correct that any personal creditors (or business creditors for which there is a personal guarantee or personal liability) have to file a claim in court against the bankruptcy to get anything? If they don't file within a certain time, the debt is simply discharged? Do you know what that time frame is?
2) How can I tell which business debts are personally-guaranteed or have personal liability? Is it safe to assume business credit cards are personally guaranteed? In going through some business mail I found unpaid bills (internet for the office, shredding/document management, some other suppliers) - are these business or personal debts? He also owes months of back rent on the office, but the lease looks to be in the business's name, so I assume there is no personal liability there.
3) He may be eligible for the Employee Retention Credit in the amount of ~$70,000. The IRS paused reviewing these claims due to the high number of fraudulent claims, but they say they have resumed and I believe my dad's business is legitimately entitled to it. If a check for the credit shows up in the mail, what would be the consequences of him withdrawing the entire amount to a personal account without paying off business debts like back rent? I strongly suspect this would be something he would want to do.
4) If he starts working again as an independent contractor, is it correct to say that he should set up a separate LLC for the income, to avoid having new income be potentially exposed to debts from the current business?
Thanks!
Our case is different in that parents finances are in good shape, it is just that it’s too much for them to manage due to their age and diminishing capacity.
I don’t have answers to your questions but I would think your bankruptcy lawyer could answer them. My young adult daughter (with mental health issues ) racked up a bunch of debt with no ability to pay for it. She declared bankruptcy. The lawyer basically asked for a list of all of the known debts, statements with addresses etc and I think some sort of notification is sent out to them but I’m not sure. Overall it was a pretty easy process.
Statistics: Posted by JBTX — Sun Jan 26, 2025 7:09 pm