Declaring bankruptcy

I thought I heard that an LLC is pretty much the same as a sole proprietor, practically speaking. If you are broke from trading and declare bankruptcy for whatever reason, I'm pretty sure it will follow you personally. So maybe you are leaving out some specifics, which is fine.

If you file, it's up to the trustee or someone who will either give you a 7 bankruptcy or 11 or 13 (not sure, i think one is partial and you do owe money and the other is.....well, not sure). My point is a 7 will clear you entirely of whatever is claimed.

So, yea, if trading causes financial ruin, and maybe there are people trying to go after you for money, I guess you can claim a 7. However, if they singed some risk disclosures for you verbally told them of risks and they are in a position to lose money, then I don't think you need to file.

moral of the story: call a bankruptcy attorney and get good advice.
 
Quote from BlueTurtle:

I thought I heard that an LLC is pretty much the same as a sole proprietor, practically speaking. If you are broke from trading and declare bankruptcy for whatever reason, I'm pretty sure it will follow you personally. So maybe you are leaving out some specifics, which is fine.

If you file, it's up to the trustee or someone who will either give you a 7 bankruptcy or 11 or 13 (not sure, i think one is partial and you do owe money and the other is.....well, not sure). My point is a 7 will clear you entirely of whatever is claimed.

So, yea, if trading causes financial ruin, and maybe there are people trying to go after you for money, I guess you can claim a 7. However, if they singed some risk disclosures for you verbally told them of risks and they are in a position to lose money, then I don't think you need to file.

moral of the story: call a bankruptcy attorney and get good advice.
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A single member LLC for TAXES, is treated like a sole prop. A multi member LLC for TAXES, is treated like a partnership. The income goes to the members. LLCs don't pay taxes, the members do. They do limit you person liability.

I still don't understand how a long option position can cause a delinquent account. If you just lose money, your LLC is not bankrupt. You liabilities will not out way your assets. If your short options, and lose money past your account, and your LLC has no other assets, I don't see a broker suing you for the money. However, they can, then you would have to look into bankruptcy for the LLC.
 
I assume if he said he would not be able to pay the options, then he wrote naked options. I actually think the brokerage will close your options if they feel the position will cause a margin call, or they will ask you to put up more capital.

Bankruptcy is meaningless in either case. I bet you did not read the fine print that says the brokerage can close option positions when you don't have enough margin to protect them.
 
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