i am an independent agent

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PostPosted: Mon Apr 08, 2013 5:24 pm   Post subject: i am an independent agent  

i am an independent agent and due to family medical bills I am considering bankruptcy. I am have a series 6,63,65 and 7 license. How will bankruptcy effect my ability to do business?

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PostPosted: Tue Apr 09, 2013 6:31 am   Post subject:   

Are you going to file for personal or business bankruptcy? If you file strictly for the outstanding medical bills, you have to file under either Chapter 13 or 7.



If you fail to qualify under the means test and file under Chapter 13, you will have to repay the medical bills as per the court approved payment plan (which would ideally take around 3-5 years) depending on the due amount.



However, if you condition is too poor and you can only get rid of the bills if the court discharges them under Chapter 7 bankruptcy (also known as liquidation bankruptcy), you have to go through a liquidation procedure where some of your non-exempt property will be sold to pay off the creditor.



However, none of the bankruptcy filings is going to harm your business or your licenses in any possible way. Since these are things that you need to make ends meet.
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PostPosted: Tue Apr 09, 2013 9:13 am   Post subject:   

Quote:
none of the bankruptcy filings is going to harm your business or your licenses in any possible way
While this could certainly be true, it is not a forgone conclusion. Filing bankruptcy could be viewed as a character issue which can impair a person's insurance and securities licenses.



Most state insurance codes include a provision that allows the Commissioner (or Superintendent/Director) to evaluate a person's fitness for licensing on the basis of "good business reputation." A pattern of business bankruptcies could be the reason to deny or revoke an insurance license.



Likewise, FINRA has Conduct Rules which, if violated, can result in a loss of registration(s). Under certain circumstances, a person's securities registrations could be subject to suspension or revocation as the result of a bankruptcy filing (particularly if done to avoid a fiduciary loss).



You cannot say "no harm" will come to the OP's licensing, because that statement just is not true.


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PostPosted: Tue Apr 09, 2013 10:11 am   Post subject:   

I absolutely respect the things you have stated here Max. But my concern is how the OP can file for business bankruptcy for some medical debts that was chiefly for personal reasons? And if the OP discharges all his debts in a personal bankruptcy, how it is going to harm his business licensing. Where you yourself have said later that



Quote:
A pattern of business bankruptcies could be the reason to deny or revoke an insurance license.


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MangoQurious
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PostPosted: Tue Apr 09, 2013 2:22 pm   Post subject:   

As an independent agent, my business and personal lives are completely intertwined. My personal reputation and my business reputation, while separate for the purposes of a bankruptcy filing, are nevertheless one in the same. It is incumbent on me to regard them as such, and to guard them as such. While bankruptcy may be a person's salvation in the moment, there are other avenues which one might pursue.



Discharging one's debts through bankruptcy might no longer offend most people, it certainly doesn't offend creditors because they come knocking at your door almost as soon as the ink is dry on the judge's discharge order -- knowing that as far as another personal bankruptcy is concerned, you are locked out of the courtroom for 10 years. But it still diminishes us, whether we realize it or not, in the eyes of some of those around us.



Businesses may fail, but the principals connected to them can form new business entities doing the exact same things, obtain new credit, and turn once again to the bankruptcy court in a few months if necessary. That's a legitimate concern of the regulators. Restaurants and retail stores, bars and tattoo parlors . . . they're regulated in very different ways. We are in an industry that has a much closer connection to people's money.



Licensed professionals are always held to a higher standard than the rest of the community, by the states and regulators that license us, by our clients, and those whom we have yet to serve.



The effect of bankruptcy on one's business cannot be underestimated. I did not say that one's licenses would be revoked, I indicated that they could be revoked. That, sir, is a true statement. It is not for us to decide, it is a matter for the regulators, and they will make a determination because bankruptcy is a disclosure event. In all likelihood, a personal bankruptcy will be glossed over and business life will go on.



But that's not my call, nor is it yours. The OP wanted to know what the possible ramifications of bankruptcy are, and you provided a wrong answer.



Quote:
your non-exempt property will be sold


One's business assets are supposed to be exempt in a personal bankruptcy, and one's personal assets are supposed to be exempt in a business bankruptcy. As a sole proprietor -- as opposed to an LLC or corporation -- it becomes a little less clear which are which, and the two are have some potential to become commingled . . . something we are prohibited from doing with client assets and business/personal assets . . . and our immunities can be diminished as a result. I don't know if you gave any consideration to this at all. But it is embedded in the OP's question about the effect of bankruptcy on his business.



And the risk, though reasonably small, is still present. It is far from "none" as your answer stated.


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PostPosted: Fri Apr 19, 2013 6:12 pm   Post subject: Affects of Bankruptcy  

Thanks for your extensive comments about the affects of bankruptcy. I posted a very similiar question and your post really gave me some insight.

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