auburngrad
Sep 30, 2007, 03:03 PM
For several reasons, including health issues and a failed business, we are on the verge of filing for Chapter 7 in Tennessee. We had some cash from the liquidation of the business assets (LLC with my husband and I as 98% owners, my Mom is 2% owner). Liquidation was in Jan, 2007. We tried to settle with creditors - some did, some didn't. We have about $75,000 in credit card and personnal line of credit debt left. My Mom had lots of sweat equity in the business but no "money in." In the spring, Mom had surgery on her foot and was unable for several months to work at her regular job as an LPN. We paid $5,000 out of the business proceeds to my Mom. Our accountant told us it was better to write the check directly to her versus check to us and then to Mom. I think I now understand from another site on bankruptcy that this transaction is not allowed and that the bankruptcy trustee will "recover" this $5000 for redistribution to other creditors. We were not trying to defraud anyone and at the time thought we had a chance to settle with our creditors and avoid bankruptcy. My Mom has no way to repay this money. Her credit is bad and she has no assets other than some equity in her home that bad credit keeps her from tapping. FINALLY THE QUESTIONS - what will happen when she cannot repay? Can we somehow take our exempt cash and repay for her? Should she borrow from a finance company until we are given a discharge and then we could repay for her? All input and ideas are appreciated.