Declaring bankruptcy

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vincentvega

I'm trading through an LLC and have lost over 55% of my capital this quarter. I have options that expire in a couple of months. They would put my company at break even or under water if they were closed today. I'm still betting on these options coming out good. If they don't, I won't be able to pay them. Would declaring bankruptcy give me limited liability, even if it means my company or even myself will be banned from trading ever again?

Please don't post on my thread with name calling or any other crap. I understand I'm an idiot who should have quit during the holidays. I'm just trying to get some serious points of views.
 
Quote from vincentvega:

I'm trading through an LLC and have lost over 55% of my capital this quarter. I have options that expire in a couple of months. They would put my company at break even or under water if they were closed today. I'm still betting on these options coming out good. If they don't, I won't be able to pay them. Would declaring bankruptcy give me limited liability, even if it means my company or even myself will be banned from trading ever again?

Please don't post on my thread with name calling or any other crap. I understand I'm an idiot who should have quit during the holidays. I'm just trying to get some serious points of views.
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The broker will not let you drop your equity below zero. They will liquidate your account first. Declaring bankruptcy would not be a solution.
 
Quote from 1245:

The broker will not let you drop your equity below zero. They will liquidate your account first. Declaring bankruptcy would not be a solution.
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These are options.

Why would it not be a solution specifically? This is a limited liability company. I guess that is my real question, is if an LLC will protect me in a disaster.
 
I'm guessing there is next to a zero percent chance that you're not personally guaranteed on the account. I can't see how any broker would allow accounts to be set up without someone being personally liable.
 
Most brokers NO NOT require personal guarantees on a LLC account. 1/2 the reason traders use an entity is for personal protection through the LLC.
 
Quote from vincentvega:

These are options.

Why would it not be a solution specifically? This is a limited liability company. I guess that is my real question, is if an LLC will protect me in a disaster.
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I'm now very confused by your questions. You're losing a lot of money in your trading account, owned by an entity. If the entity, which has assets in the brokerage account and maybe a checking account goes to zero, that's it. They can't go after your person assets. Why would you go through personal bankruptcy? If the LLC has no assets, the LLC does not have to file. There are just no assets there.
 
Quote from 1245:

I'm now very confused by your questions. You're losing a lot of money in your trading account, owned by an entity. If the entity, which has assets in the brokerage account and maybe a checking account goes to zero, that's it. They can't go after your person assets. Why would you go through personal bankruptcy? If the LLC has no assets, the LLC does not have to file. There are just no assets there.
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Because these are options that might break the bank, not stocks or futures or forex. I have no obligations to put down money until expiration arrives.
 
Quote from vincentvega:

Because these are options that might break the bank, not stocks or futures or forex. I have no obligations to put down money until expiration arrives.
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You're long equity options? That is the position you're losing money on? Is this a Reg-t margin account or PM?
 
Bankruptcy is declared when there is debt (financial liability) that cannot be paid back. As of now your LLC is solvent so it cannot declare bankruptcy. LLC will protect your personal assets unless it was set up for fraudulent purposes or it was willfully undercapitalized. Unless you write naked options your premium is already paid and your loss is known when they expire worthless. You have to be more specific what is your financial liability in this case.

Bankruptcy protects your LLC (or you) from creditors. Once declared they have to contact bankruptcy trustee; cannot sue you, send collection agency but they still can hire somebody to break your thumb.

Bankruptcy would not ban you from trading. You may have issues becoming a broker, certified financial advisor, member of the exchange, getting a loan etc. and it is permanent court record that you may have to disclose when asked and it would have to be specific question that would tie your name (say director of LLC) to bankruptcy proceedings.

Otherwise it is just technical procedure.
 
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