If my husband and Iare filing Chapter7for our personal debt and we own a small business LLC, can the vendor debt under the LLC be included inour filing?

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If my husband and Iare filing Chapter7for our personal debt and we own a small business LLC, can the vendor debt under the LLC be included inour filing?

We have met with 2 lawyers, the first said all debt could be filed under the Chapter 7 – business and personal. The second lawyer told us that our business would have to file separately or just change the name of the business. Also, does the business have to continue to operate under Chapter 7? What if it goes under?

Asked on July 28, 2011 Pennsylvania

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Your limited liability company is a separate entity than you or your spouse. Further, Chapter 7 may not be the best option for you for your limited liability company. Next, while the limited liability company may become a property of the estate, some bankruptcy courts do not see that as a way to obtain an automatic stay of all debts owed, including those owed by the limited liability company to a third party vendor. If you go into bankruptcy (a certain type of bankruptcy) for the business, you may actually not be able to conduct business. Consider your options by meeting with a bankruptcy attorney recommended by your state bar (or on a special credentialed list). You can check his or her disciplinary record with the Pennsylvania state bar.


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