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Can creditors come after my companies?

West Palm Beach, FL |

I've lost everything with huge outstanding mortgage debts and now filing Chapter 7. I've also recently formed two companies this year that can transact any type of business, can my creditors bypass my chapter 7 filing and pursue me personally via my companies or my share of the companies?

Attorney Answers 4


Do not file a bankruptcy case on your own without an attorney. You ownership interests in your companies are assets of yours that may or may not be protected from your creditors. The danger you face is that your bankruptcy trustee can take over the companies and sell them or sell of their assets if the ownership interests are non-exempt. Also, if your xompanies have any teceivables that may create issues in your personal bankruptcy.

Do yourself a big favor and consult with and the retain an experienced attorney before filing for bankruptcy.

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Companies and the individuals who own them are separate and distinct entities in Florida. That said, it is unclear what you mean by "now filing Chapter 7" or whether the two business entities are just shells or operating entities. Either way your Chapter 7 MUST disclose their existence and, if they are worth anything, disclosure what their value is.

My office happens to be in Palm Beach County, but whether you call our office or not, definitely speak to someone competent in bankruptcy law about filing your case to ensure you are taking the rights steps the right way.

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The answer your question depends on the type of business. If the businesses are LLC's in which you are the only member, a partnership, or a sole proprietorship, the bankruptcy court could liquidate the assets of such business forms to satisfy your personal answer. If your business is a corporation, your personally held shares could be subject to liquidation to satisfy creditors. Otherwise, the general rule is that assets of another entity in which you are a party or that you own will not be liquidated to satisfy creditors unless there is a showing of fraudulently using the entity to shield personal assets.

This response does not create an attorney-client relationship. Unless you are already a client of the Law Office of Preston H. Oughton, pursuant to an executed fee agreement, you should not use, interpret, or rely on this response as legal advice or opinion. Do not act on any information in this response without seeking legal advice. Preston H. Oughton (904) 854-6336.

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1 comment

Earl David Maxwell

Earl David Maxwell


…satisfy your personal debt. ... I agree. Don't go this alone. Consult a qualified bankruptcy lawyer.


Your assets include your ownership in businesses and in securities of businesses. The extent to which your business assets can be liquidated are reliant on your percentage ownership of the business as well as when the businesses were funded. If you just put your money and assets into the business 3 months before you filed bankruptcy, there is a good chance that your trustee will want to fight to add the assets to your case. Talk to a bankruptcy lawyer ASAP.
The DiGiulio Law Firm, LLC.

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