Question Asked...
We financed our business (incorporated) inventory purchases using our credit cards over the last 5 years. We are now realizing that the business isn`t viable and have a large amount of credit card debt. We want declare personal bankruptcy and start a new sole proprietorship and use the inventory from the existing business. The corporation has been paying the credit card minimum payments to pay back the `loan`.
Question: Who owns the inventory that was purchased by credit card? Would the inventory be considered an asset of the person (and attached to the bankruptcy) or would it be considered to be like a secured loan to the company, meaning that we could take it back in repayment
There is $80,000 in credit card debt and $50,000 in inventory.
Posted from: British Columbia
This is difficult to tell without reviewing the documentation associated with the secured loan. However, if the inventory is not secured by that loan it is considered an asset of the business. However, as shareholders in the business if there are assest in the business then there is a good possibility those shares have value that would be equivallent to assets in the business. So indirectly these assets will have to be addressed if you file for bankruptcy. The best thing to do is to contact a local trustee, bring documentation concerning any loans, and then the trustee will be better able to advise you.