Personal Bankruptcy Incorporated company debt dischargeable in personal chapter 7

[meow2009]

Small business is incorporated. There is a judgment against the company for unpaid wages in the form of commissions. The owner is trying to discharge this company debt on their personal chapter 7 bankruptcy. I have filed an adversary proceeding. Can the owner discharge this debt through his personal bankruptcy? I do have evidence that the owner co-mingled personal and corporate assets. Thank you for any advice.

 

[jharris352]

He can attempt to discharge any personal liability he may have in the chapter 7 he can not discharge any liability his company may have.

 

[meow2009]

So, if the debt is discharged on his personal bankruptcy, do I still have a valid judgment against the company by which I can attempt to collect? All company debt was discharged on his personal bankruptcy. Can the company declare bankruptcy if the only debt it has is mine?

 

[jharris352]

His PERSONAL liability is discharged in the Chapter 7. His company is not party to the chapter 7. His company can also file chapter 7 but the trustee would liquidate any assets in favor of his creditors, you. Make sense?

 

[meow2009]

Thank you

Thank you for your advice. That makes sense.

 

[cocojambo]

Or instead his company could pursue Chapter 11 bankruptcy to re-organize its debts, and they would probably work out a reaffirmation agreement and you might have to lower the amount of money you receive from that company... This is seen in rare cases as the business owner might just try to discharge his business liabilities through chapter 7 bankruptcy. Bankruptcy Law says Federal bankruptcy laws govern how companies go out of business or recover from crippling debt. A bankrupt company, the "debtor," might use Chapter 11 of the Bankruptcy Code to "reorganize" its business and try to become profitable again. Management continues to run the day-to-day business operations but all significant business decisions must be approved by a bankruptcy court. "

 

[diy4law]

If the owner files Chapter 7 bankruptcy and the laminates any liability that he might have with the company. He can just close it if there are no assets or property to be liquidated. At that point I think there would be no recourse for you to chase him.