Q: Our CA S corp has a $244k EIDL loan. Our business closed and we don’t have assets or inventory. Is Chapter 7 the answer?
A:
Bankruptcy could be helpful. But how do we know? The advice you get on a question-and-answer site is general, and never specific because no conversation is taking place. In response to a question like yours, I doubt you can get an answer that is actually helpful.
Go see a bankruptcy lawyer, in person. You simply have no idea of all things an experienced lawyer is going to ask you about.
Martha Warriner Jarrett agrees with this answer
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A:
Filing for Chapter 7 bankruptcy could be an option if your California S corporation has no assets, no inventory, and you are unable to repay the EIDL loan. Chapter 7 involves liquidating any remaining assets, but since your business has none, the court may discharge the debt, relieving you of the obligation. However, this does not necessarily impact your personal liability unless you personally guaranteed the loan.
It’s important to note that if you did personally guarantee the EIDL loan, Chapter 7 for your corporation may not protect you from being held responsible for the debt. You might need to explore personal bankruptcy options or negotiate with creditors to handle any individual liability.
Before deciding on Chapter 7, consider the potential long-term impacts on your credit and whether this is the best solution for your situation. Consulting with a legal or financial advisor can provide guidance tailored to your circumstances.
Tristan Brown and Martha Warriner Jarrett agree with this answer
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