If I invest all my savings into a new LLC and then file Chapter 7, can the court take that business?
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If I invest all my savings into a new LLC and then file Chapter 7, can the court take that business?
I have 50K in savings and want to invest it all in a side business and then file Chapter 7. I have no income and 250K in debt.
Asked on December 20, 2011 under Bankruptcy Law, Alabama
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
Yes, the business could potentially be taken to satisfy creditors:
1) First of all, if you own the business entirely by yourself, it is an asset of yours; therefore, it could be considered for use for repayment like any other asset (e.g. a house). Even if you own it jointly with others, your ownership interest, share, or stake is an asset potentially available to creditors.
2) Also, bankruptcy courts can set aside transfers or transactions which were done with the intention of defrauding creditors or trying to hide assets--and the transaction you describe would seem to fall into that definition or category.
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