Bankruptcy assets held by LLC are not personal assets for bankruptcy protection.
Classifications of assets have major financial impacts when filing bankruptcy. When filing Chapter 7 Bankruptcy, https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-7-bankruptcy-basics you could lose your home. In some situations, there is no bankruptcy protection.
Below is a particular example wherein a Debtor should not be shocked when he loses his residence. A bankruptcy lawyer should point this out immediately.
Debtor holds several businesses that are limited liability corporations (LLC). When the Debtor filed bankruptcy, the Debtor’s personal residence is owned by his LLC.
As a result, the debtor’s personal residence is not the debtor’s asset, In the Chapter 7, this asset has no bankruptcy protection. The LLC owns the personal residence. As a matter of fact, the debtor pays rent to the LLC.
During a period of 14 years, the Debtor transfers his home between his LLC and himself. There are several refinances. At the time the Debtor files for bankruptcy, an LLC owns his residence. However, the Debtor wants to exempt his residence as being his personal asset. Debtor’s residential lease is month-to-month
Debtor comes to Bankruptcy Court and requests that his residence be considered as a personal bankruptcy asset. In this way, he could exempt the equity in his home.
However, the Court found that the residence which the Debtor rents cannot be exempted in bankruptcy.
No bankruptcy protection – this could happen to you. Bankruptcy Protection | NJ Bankruptcy Law Firm
As a result, the Trustee takes the home. The month-to-month lease is not renewed. There is no bankruptcy protection. The Debtor loses his personal residence.
You cannot ask the Court to pierce your corporate veil. You cannot move assets between personal and corporate at will.
Hire an experienced bankruptcy lawyer who specializes in bankruptcy law. I explain to my clients both the benefits and risks before they decide to file bankruptcy.
During my initial free bankruptcy consultation, I do a thorough review of the goals of my clients. Many come to me wanting to file a Chapter 7. I meet with them and go over their particular situations, I may recommend a Chapter 13 instead.
Before you file bankruptcy, call me to set up a free consultation. I am here to protect client’s bankruptcy assets and financial futures. Bankruptcy Lawyer Contact Form