Got clipped with a bankruptcy....I have a question.

[Connie]

Hi had a client file bankruptcy on me. He is a partner in a company that I did lots of work for and taxes etc. He has filed a Personal Bankruptcy, but I got a letter that indicates that the entire amount of money owed to me for the Partnership is going to be included in his bankruptcy. I don't feel any of it should be included since the Partnership and the Individual are two separate things. Is someone trying to pull a fast one one on me perhaps?? I am owed several thousand dollars by the business and a few hundred by the man filing. Any suggestions or advise? Thank you!

[Anarchrist]

A client I picked up in August went through a bankruptcy last year. Her corporation was insolvent but the bankruptcy was personal only. The corporation didn't file for bankruptcy but all of the company's liabilities were listed in the personal bankruptcy filing, including ones that she did not personally guarantee. Sounded odd to me, but that's how her lawyer told her to do it and it went through.

My client was president and sole shareholder of her company. If your client owns the vast majority of the partnership it may be similar. If he has numerous other partners and owns less than 50%, I would think it couldn't be included in a personal bankruptcy. But you really need to get an opinion from a lawyer.

If he personally guaranteed the obligation of the partnership I could see why it would be included in his personal bankruptcy.

[S T]

Usually

Even though a lot of information is passed around about the liability protection of various entities, generaly speaking, partners of a partnership and sole shareholders of an S corp or LLC usually have to guarantee any loans, credit, etc.

I agree with prior post, this is probably the reason why your outstanding amount is included on the personal bankruptcy, Could be in the partnership agreement that the partners are liable for all debts and to pay all outstanding creditors.

Check with an attorney and file a creditor claim, or the paperwork that they sent you to be included as a creditor on the bankruptcy.

Don't know if you will find the info you need but try these links or google "creditor rights bankruptcy". http://www.moranlaw.net/creditorfaq.htm
http://www.zeromillion.com/financial...ve-austin.html Might also help to be "state" specific in your search.

Sandy

[geekgirldany]

I had a customer that claimed bankruptcy and all the partnership liabilities were included with the personal. Other partner was long gone.

[BHoffman]

You ain't alone

I just got stung for $1200 by a bankrupt client. He's going to "make it up to me" by "using me for next year's taxes". (huh?)

[thomtax]

I just got stung for $1200 by a bankrupt client. He's going to "make it up to me" by "using me for next year's taxes". (huh?)

Maybe he is working on the principle of "I'd rather owe you than beat you out of it". And of course next year's return will have all the bankruptcy complications to it so he can owe you even more. Just think, by the time he finishes up settleing with you, you may owe him money.

LT

[Jesse]

Just think, by the time he finishes up settleing with you, you may owe him money.

LT

Ha, ha...when we had a rental property we had a tenant like that, a former friend no less. They had sob stories for a couple of months rent but seemed they never lacked money to go out to dinner or stop at the corner pub everynight...so we had to start legal action to get them out.

To make a longer story shorter they left town and left most of their belongings in the house - told us to have a rummage sale and we'd come out ahead of the game. We ended up taking everything to the landfill so had to pay to get rid of it! To this day they still claim we "screwed" them!

[Richcpaman]

Connie:

Start with your engagement letters. One for the personal return and one for the Partnership. What does it say and who signed it. Don't have one? Time to start, lesson learned.

Follow up with the Bankruptcy court. File your claim and make sure you are listed as a creditor. Many unsecured folks, don't. Does that mean you will get any money? No. But with the changes in the law, there are payment plans that the deadbeats are supposed to follow. And then the court administers the payments and sends your share each month. If you do nothing, you get nothing. If you validate you claim, then your at least in the running to get something from the proceeds.

Just because the client LISTED you does not mean that you stay there. You just might find out that the personal part is ixcluded, but the partnership isn't, and they still owe you the money. And then you can go for a secured position before others do. At least than you move up the food chain.

I wouldn't do it for $100, but I would do it for $3k.

Rich