Question about filing for bankruptcy?

-Have owned a franchisee for 2 years (it's a corporation, INC)
-Have maxed one credit card under the business name (which is also personally guaranteed)
-Have borrowed money from personal credit cards
-Owe Employee, Sales and Quarterly Taxes
-Owe Royalties
-I am one month behind on lease

-I can't run the business anymore and I am completely out of money to try to recover. Every day the business is open is putting me more in debt. I don't want to fall behind on payroll.

I spoke to personal Bankruptcy lawyer. He suggested to either file for personal bankruptcy since the business credit card is also personally guaranteed (so all the business debts will roll over to personal anyway) and involve my spouse.

The lease of the shop is under the Franchisor name. I am just a subleasor.

We are doing the paperwork now. Can I just close the shop down starting January 1, 2008? to avoid getting more in debt?

What are your opinions? What are the pros and cons of this?

thank you for your help!

Depending on the state you may not have to include your spouse in a personal bankruptcy.

By all means, if you can't afford to keep running the business, you need to shut it down, you certainly don't need to incur MORE personally guaranteed debts. If the company has any assets you want to liquidate them to pay off as much of the debt as possible. A chapter 7 for the company is where this would come in handy, because then you can assure the right debts get paid first (ie, secured debts and the taxes).

The taxes are a huge issue, they do not go away, but if they are only owed by the corporation and not yourself, that shouldn't impact you personally (you really need to consult a tax attorney about this).

You should contact the landlord of the lease about shutting down and turning possession back over. The landlord will most likely appreciate this since they'll lose less money if they don't have to file an eviction case. If you are personally on the lease (or sublease as it may be), they CAN go after you for any amounts owed.

You definitely should shut the shop down, I don't see how it is benefitting anyone to keep it open. You need to notify any employees. And you should be talking to your attorney about this. He/she needs to know what you are doing.

While you do not have to legally file with your spouse, if you have joint debts that you want to discharge, it will be useless if he doesn't file with you because he will still be liable whether or not you are.