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If I file Chapter 7 bankruptcy for my business (which is an LLC) will this affect our personal credit?

Snohomish, WA |

My husband has a job at an insurance company and, if we file bankruptcy, they will fire him (it's in his contract). However, my business is in a lot of debt and the economy has made it worse. If I file Chapter 7 bankruptcy, will this affect our personal credit and screw up my husband's job too?

Attorney Answers 2


  1. Best answer

    First of all, it is likely that the clause in your husband's contract that say he will be fired if he files bankruptcy is probably not enforceable. See 11 U.S.C. Section 525(a) which makes it illegal to fire a person solely because he files bankruptcy.

    Even though your husband is protected, if much of the debt is in your name only, you may wish to file Chapter 7 yourself and not have your husband file with you. Your bankruptcy would, if all goes well, discharge all the debt that you and only you owe. It would also prevent any creditor of the two of you from attempting to collect the debt from you, but your husband would remain liable for the full debt

    Then there is the matter of the LLC. Because businesses do not receive a discharge in a Chapter 7, it may be best just to let the LLC die.

    Only a careful analysis by a bankruptcy lawyer will yield the specific advice you need to best handle your situation. Right now, there are too many variables that have not been answered. Go to the National Association of Bankruptcy Attorneys website (see link below) and find a member-attorney near you. Then see if the attorney offers a free initial consultation and go from there.


  2. First of all, it is likely that the clause in your husband's contract that say he will be fired if he files bankruptcy is probably not enforceable. See 11 U.S.C. Section 525(a) which makes it illegal to fire a person solely because he files bankruptcy.

    Even though your husband is protected, if much of the debt is in your name only, you may wish to file Chapter 7 yourself and not have your husband file with you. Your bankruptcy would, if all goes well, discharge all the debt that you and only you owe. It would also prevent any creditor of the two of you from attempting to collect the debt from you, but your husband would remain liable for the full debt

    Then there is the matter of the LLC. Because businesses do not receive a discharge in a Chapter 7, it may be best just to let the LLC die.

    Only a careful analysis by a bankruptcy lawyer will yield the specific advice you need to best handle your situation. Right now, there are too many variables that have not been answered. Go to the National Association of Bankruptcy Attorneys website (see link below) and find a member-attorney near you. Then see if the attorney offers a free initial consultation and go from there.

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