Legal guys - Bankruptcy question (1 Viewer)

[wittyusername]

While I am hoping for the best, I need to plan for the worst.  I am a retired from the USG and have a federal annuity/pension & social security.  My wife and I opened a small retail business and had to sign a "Personal Guarantee" for our SBA Loan and with our landlord for our lease.  Our  business was/is formed as a C-Corporation (required as this was a Roll-Over for Business Start-up). My question is - if we have to declare bankruptcy (due to COVID-19 impacts) - I guess my 401K and home might be lost, but is my Pension and Social Security protected?  Or am I screwed?  TIA. 

 

[Keerock]

I'm not an expert, and don't have links, but from some prior reading into this, I beleive your home and retirement would be exempt from bankruptcy related assets.

 

[wittyusername]

Thanks, that is what I am assuming - also my Social Security is probably protected.  I suspect I should go see a bankruptcy lawyer with my lease, SBA Loan documents, etc to let them review and make recommendations to pre-position my finances in the worse happens.  Or should I see an accountant?  Or both?  Geeze this sucks.

 

[Juxtatarot]

Was the house collateral in the Personal Guarantee?  

Retirement assets should be safe.

 

[johnnycakes]

Have you filed to protect your house under your state's homestead laws?  

 

[Angry Beavers]

What state you are in is going to have an impact on what is protected. See a bankruptcy attorney, not an accountant. HTH. DM me if you have specific questions, but a lot of this depends upon your state. 

 

[Ron Swanson]

Talk to the SBA and your landlord first.  Lots more to develop on this and SBA loans and extensions are at the top of the list.  And your landlord isn't likely do do any better than you in the short to mid term.  You hold more cards than you think.

 

[wittyusername]

Was the house collateral in the Personal Guarantee?  

Retirement assets should be safe.

I signed a Personal Guarantee, but it does not specifically identify collateral so I am assuming the house it at risk.

 

[wittyusername]

Have you filed to protect your house under your state's homestead laws?  

Well... we do receive the state (Florida) Homestead Exemption for tax purposes, so I assume that would cover this?

 

[wittyusername]

What state you are in is going to have an impact on what is protected. See a bankruptcy attorney, not an accountant. HTH. DM me if you have specific questions, but a lot of this depends upon your state. 

I live in Florida, and yes thanks I'll look for a Bankruptcy Lawyer here in the Tampa Bay area.

 

[wittyusername]

Talk to the SBA and your landlord first.  Lots more to develop on this and SBA loans and extensions are at the top of the list.  And your landlord isn't likely do do any better than you in the short to mid term.  You hold more cards than you think.

Yes that is what I am thinking.  It is in the best interest of the Landlord that their tenants do not all have to file bankruptcy and therefore they should be ready/willing to negotiate.  It also remains to be seen what/how the Federal and State emergency relief programs will look like once they are rolled out, so it might be a few days/weeks before we can sit back and really see and understand all the options available.

 

[Juxtatarot]

I signed a Personal Guarantee, but it does not specifically identify collateral so I am assuming the house it at risk.

I would assume the opposite.  

 

[eoMMan]

No advice here but good luck with it all. Hope it works out better than expected. 

 

[Angry Beavers]

I would assume the opposite.  

agreed

 

[Chadstroma]

No where near an expert and not a lawyer but been around lending for 20 something years. 

My understanding is that retirement and home are protected under BK laws. 

 

[Chadstroma]

I signed a Personal Guarantee, but it does not specifically identify collateral so I am assuming the house it at risk.

Unless you put a lien on your property as collateral (which is sounds like you did not) I would say that most likely the home is safe under BK laws. 

 

[Tecumseh]

Here's my experience- I defaulted on an SBA loan in 2004, and also had a personal guarantee. In my case, that guarantee amounted to a second mortgage. At the time, i did not declare bankruptcy, because bankruptcy would not have eliminated the SBA debt. The feds took no action to recover the SBA debt. After a few years, the SBA basically handed the debt over to the IRS to handle. Since that time, the IRS has not come after me, however, I do not receive any tax refunds, either Federal or state. They are applied to my debt. 

In 2017, due to unrelated issues, we did end up filing bankruptcy. Again, the SBA debt, which is attached to my home, was not eliminated. We continued to pay our primary mortgage and kept the house. Essentially what will happen is that when we sell our house (likely this year), the primary mortgage will be serviced first, then the SBA lien. Whatever is left will be ours.

 

[Yankee23Fan]

I handle a lot of bankruptcies.  Talk to a lawyer in your state and don't rely on a single thing you read online. Literally none of it.  And find one that has been doing it awhile. There are going to be a lot of guys getting into it this year because unfortunately, that is going to grow as a need. You need someone experienced in bankruptcy strategy, not just filing a petition online.

 

[Chemical X]

IIRC, florida primary residence is protected, regardless of a BK filing.  Homestead....yadda yadda.

 

[wittyusername]

I handle a lot of bankruptcies.  Talk to a lawyer in your state and don't rely on a single thing you read online. Literally none of it.  And find one that has been doing it awhile. There are going to be a lot of guys getting into it this year because unfortunately, that is going to grow as a need. You need someone experienced in bankruptcy strategy, not just filing a petition online.

Thanks, best advice yet. Will do.

 

[wittyusername]

Here's my experience- I defaulted on an SBA loan in 2004, and also had a personal guarantee. In my case, that guarantee amounted to a second mortgage. At the time, i did not declare bankruptcy, because bankruptcy would not have eliminated the SBA debt. The feds took no action to recover the SBA debt. After a few years, the SBA basically handed the debt over to the IRS to handle. Since that time, the IRS has not come after me, however, I do not receive any tax refunds, either Federal or state. They are applied to my debt. 

In 2017, due to unrelated issues, we did end up filing bankruptcy. Again, the SBA debt, which is attached to my home, was not eliminated. We continued to pay our primary mortgage and kept the house. Essentially what will happen is that when we sell our house (likely this year), the primary mortgage will be serviced first, then the SBA lien. Whatever is left will be ours.

Thanks, this is looking better and better for me - at least from what I originally envisioned.