Chapter 7. I own a 10% share in a family owned business. Dividends haven't paid yet. must I disclose? can they be garnished?

Asked over 4 years ago - New Port Richey, FL

The trust is divided among the rest of my family members. Dividends haven't paid yet due to growing the company. Need I disclose my share and how will it effect my share or that of others? Can have my share transferred temporarily to another share-holder while in the process?

Attorney answers (2)

  1. Lewis Matthew Roberts

    Contributor Level 16

    Answered . You must disclose your interest in the trust if you file bankruptcy. You cannot just transfer your share of the trust out of your name before filing bankruptcy.

    You should seek the advice of a bankruptcy attorney before doing anything.

  2. Carole Suzanne Bess

    Contributor Level 8

    Answered . You do need to disclose the 10% share. You should not transfer the share. This would amount to a preferential transfer, and is subject to being undone by a trustee. Either of these courses of action would amount to bankruptcy fraud, and you could get into serious trouble, as well as put your discharge in jeopardy. It is simply not worth the trouble non-disclosure or a transfer would cause.

    A chapter 7 trustee could take this 10% of the stock of the company, and perhaps force a sale, but would probably be more interested in either you or a family member buying the stock back. You will need to determine what the company is worth, and what 10 % of the total will be. Its also possible, that between the debt and liabilities of the company, that your share has no real worth, a a trustee would abandon this asset.

    A final solution is to file a chpater 13, if your share is worth more than either you or your family can buy back. In a chapter 13, you would have 5 years to repay this amount back to a trustee.

    Its extremely important for you to discuss all options with your attorney and to make sure you disclose this issue and any other assets to your attorney.

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