corporate bankruptcy

[lucid vein]

I'm in Kansas. I own a small business and it's a sole proprietorship. And it's failing, I have big debts that I cannot pay off and if I can avoid filing a personal bankruptcy then that's what I would like to do.

Someone was telling me tonight, "In all the years you're going to be paying off those debts, you could do better investing it in your other business and getting back in the game again. So, incorporate the failing business. THEN file corporation bankruptcy. It's the LLC that is bankrupt then, not you personally. Your personal credit is still good to make the other, better business work".

I don't know. And I'd like to know if that would work? A personal bankruptcy would make life quite difficult for the next 10 years of my life, and I have a great idea for another business that'd be more productive not just for me but would employ people and accomplish other good things, where going bankrupt leaves me just an employee myself with little to give to the world other than only pay rent and bills.

So the idea is one I'm considering. I just need to know if there's even anything there to consider, or if he's just altogether wrong?

Thanks

 

[bigun]

Did you personally guarantee the debts? If so, it does not matter how your business is organized. The creditors will still have recourse to you.

 

[lucid vein]

Yes I did. And that's that then. Thanks for your response.