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Bankruptcy filings in the federal courts rose 31 percent in calendar year 2008, according to data released in March by the Administrative Office of the U.S. Courts. The majority of bankruptcy filings involve non-business debts. Chapter 7 alone, accounted for a 43% increase in bankruptcies for 2008. The prognosis for 2009 isn't looking much brighter!

If you are considering bankruptcy and do not know if you would make a good candidate for filing, please call us or your trusted legal advisor as soon as possible to obtain the necessary information you need to make an informed decision. 626.683.8869

Question #1:
My wife and I run small business and are going thru a divorce. She has asked if i am willing to take over the business and the $65k worth of debt that has accumulated. One of those debts is an SBA loan. I'd like to know if this type of loan can be included in a bankruptcy if I can't handle all of the debt?

Answer:
It can be included, but you'll have to see what it was secured by, if anything--the SBA may be entitled to those assets if it was secured. Also, if your wife agreed to be responsible for the loan as well, the lender will look to her for repayment unless she also files for a bankruptcy. Have an experienced bankruptcy attorney review the debts, assets and personal guarantees to see what the effects of a bankruptcy would be.

Question #2:
We are a sole proprietor business in construction. I am being sued in court, cannot afford to finish case with high lawyer fees. If I represent myself and lose will bankruptcy protect my home, my rental property, and the plaintiffs award approx. $70,000 be erased. My home has no equity, my rental is upside down- no equity. Will bankruptcy forgive the $70,000 altogether. My wife and I make approx $60,00 yr, right now that goes all mortgages, second on house, payback 401k loans. No construction business income at all, license not active since 2008.

Answer:
It sounds like you'd qualify for a Chapter 7 bankruptcy and be able to keep your real estate, but you'd have to have a bankruptcy attorney review your details to be sure.

There are some exceptions to the bankruptcy discharge that your plaintiff could try to claim in bankruptcy court, so these should be reviewed as well before you make a decision to file.

For more information, please contact Chris Johnson 626.683.8869 or cjohnson@rrjlaw.com