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Old Jul 8th, 2012, 06:56 PM   #7
vincentvega
 
 
Join Date: Feb 2012
Location: Chicago/CME
Posts: 110
Quote:
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.
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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Old Jul 8th, 2012, 06:59 PM   #8
1245
 
 
Join Date: May 2012
Posts: 703
Quote:
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.
You're long equity options? That is the position you're losing money on? Is this a Reg-t margin account or PM?
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Old Jul 8th, 2012, 07:10 PM   #9
failed_trad3r
 
 
Join Date: Oct 2009
Posts: 1,773
you want to be blacklisted?
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Old Jul 8th, 2012, 08:31 PM   #10
vicirek
 
 
Join Date: Dec 2011
Posts: 501
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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Old Jul 8th, 2012, 09:06 PM   #11
BlueTurtle
 
 
Join Date: Jan 2012
Posts: 569
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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Old Jul 8th, 2012, 09:19 PM   #12
1245
 
 
Join Date: May 2012
Posts: 703
Quote:
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.
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.
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