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If a chapter 7 debtor owns a small S-corp business, should he list the assets of the business in his personal bk schedules?

Riverside, CA |

Just wondering, is it just that the ownership of the business itself is an asset? Or would I also need to list (for example) the forklift that the corporation leases, etc. in my schedules?

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Posted

The ownership interest in the business is the asset that must be listed on Schedule B and exempted (to the extent there is value). The assets of the business are the businesses and should not be listed unless the debtor is claiming he owns them instead of the business. The business also needs to be disclosed on the statement of financial affairs.

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Posted

Please don't try to handle this bankruptcy by yourself. The attorney fee will be well spent if you hire an experienced attorney.

Be sure to designate "best answer." If you live in Oregon, you may call me for more detailed advice, 503-650-9662. Please be aware that each answer on this website is based upon the facts, or lack thereof, provided in the question. To be sure you get complete and comprehensive answers, based upon the totality of your situation, contact a local attorney who specializes in the area of law that involves your legal problem. Diane L. Gruber has been practicing law in Oregon for 26 years, specializing in family law, bankruptcy, estate planning and probate. Note: Diane L. Gruber does not represent you until a written fee agreement has been signed by you and Diane L. Gruber, and the fee listed in the agreement has been paid.

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You list the shares of the corporation and value them at the book value of the corporation.

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There are any number of ways of going about listing the corporation on schedule B as an asset. You could list the shares and place value on them. Many small businesses do not have much value other than the physical assets of the business. If the business was liquidated how much would the physical assets of the business be worth? Valuations of businesses can be very complicated sometimes and you should consult with a local bankruptcy attorney and discuss it at length. If you file a Chapter 7 bankruptcy case the trustee has the right and power to shut the business down or even operate the business under some circumstances. If you have w-2 employees there can be additional issues.

is a Bay Area bankruptcy lawyer and has been practicing exclusively bankruptcy law in California since 2007. Mr. Wood formerly worked for David Burchard, Chapter 13 Trustee for the Santa Rosa and San Francisco Divisions of the United States Bankruptcy Court for the Northern District of California. West Coast Bankruptcy Attorneys has filed hundreds of bankruptcy cases and has an “A” rating by the Better Business Bureau.

Legal Disclaimer: Ryan C. Wood practices law in California only. Any answers to questions re not intended to be legal advice or create an attorney-client relationship. Always consult an attorney in your jurisdiction about your particular circumstances.

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