Personal Bankruptcy Serious Advise Needed.

[danay21]

Hello-

My family owns a construction business that was doing well for over 10 years but with the housing market and bad contracts has taken more than a nose dive in the last year. Our overhead is extremly high because each electrician makes $25-30/ hr and we have 10 of them. We have downsized all we can. Not to mention we had a credit line that was finally exhausted this year after 5 years and also a business building loan for our office tht is $ 670,000 and on an arm. Interest rates are at the highest and with the huge overhead the contracts we do have are not sufficient. We have delved into personal savings etc. Currently, the major contract we had for $ 371,000 has been completed but the General Contractor refuses to pay. We've taken him to the Contractors Board and ahve placed liens on the propety along with my suppliers liens on them. I'm frustrated, scared, and completely exhuasted as I have no options to get money to help me through this time. The oth er contracts we have are taking forever to pay. I have Suppliers and Vendors on me daily threatening law suits if i dont pay. I have literally "robbed peter to pay paul" and have no more funds to do so. Each week i'm met with how to pay payroll. My issues are:

1. suppliers and vendors are threatening to cash out on our personal guranty when we first opened the count years ago. They are threatening that they will go into our personal accounts to retrieve monies owed. Can they do this? We're an Incorporation.
2. I cant afford the overhead of my building and other miscellaneious that comes with operating business. Is bankruptcy my only option?
3. I have not made weekly FICA deposits thsi quarter and reports for 941's were due yesterday. The IRS wants collections information. What do I do?

I have talked to Bankruptcy lawyers who do not give answers but are attempting to help us with lines of credit. Should I file? I've attempted further lines of credit but my business tax return last year looked horrible!!! and my obvious P&L statements are bad. What can I do?

 

[lam2580]

First off, I'm NOT a lawyer. Although from experience, I'd stop the bleeding as fast as possible. Right now, the IRS has the bigger hand. Payroll taxes as you know can really get you in the greatest financial trouble. Bankruptcy does not relieve you from taxes. Uncle Sam is going to get paid one way or another. Go into your local IRS office and more than likely they will assign an agent you will need to work with to make payment arrangements. Know that you'll still have to pay the interest and penalties but on sheduled arrangement. The deal is that you have to be current with your 941's from here on out. You have to ask yourself if you can actually do this. It sounds to me that you are having a difficult time trying to stay afloat. You can't rob the IRS to pay Paul! The interest rate can get up to 25% and continue with penalties for late filing! The government has greater power to levy your accounts and can empty out whatever you might have AND garnish any wages you might be receiving. As far as your other creditors, keep them informed as to your situation and make arrangements to pay them what you can. They know that they don't get anything if you file for bankruptcy.

This is blunt. you need to take a hard look if running your company is likely to prove profitable for you. Is there something specific you can change that will make operations for you more profitable? Unless you strike oil, successful business takes in addition hard headed financial and market analysis, tough contract negotiations, realistic goals and plans to achieve them.

Bankruptcy may releive you from most of your creditors and possibly an opportunity to start over again but it won't relieve you from the IRS! Best of luck to you.

 

[lwpat]

YOu really have to decide whether you want ot try to continue the business or not. If so then you will need to try and get someone that will agree to invest in the company for a share of the business. Otherwise BK is probably your only option. The suppliers can go after you personally if you signed guarantees which is normal.

You need to be sure that the leins have been done properly and that you file for foreclosure within the appropriate time limit. One thing you can do is to talk to your suppliers and get them to agree to hold off until you receive those funds. You are personally liable for the IRS taxes and BK will not help you there. Best to go in immediately and talk to them and try to work out some type of payment plan. Do not hire one of these firms that promise to help you get out of what you owe the IRS. It won't work for withholding.