Pers loans to bus acct

[lolly]

Situation: Filed Ch 13 with W2 earnings, self employment and unemployment income. Self-emp income is dep into LLC and net is drawn after expenses. Sometimes I fund the LLC from personal account to cover bus expenses so they can be "expensed" for tax purposes. Trustee wants monthly fin'l reports for 6 months prior to filing and I have to indicate those deposits among any others. Is this acceptable or do I have to treat it differently?

Also, sometimes in pers account, if balances get too low, the overdraft feature kicks in from Mother-in-law (lives with us) account. How to treat those?

Any ideas?

[justbroke]

All I can say is that you have tax issues that require a tax professional (CPA, Tax Attorney) and/or your Bankruptcy lawyer. The reason I can't comment on this is because there are some tax and income implications when you are moving money in the particular way that you are... especially with Mom who doesn't own part of the LLC???

I'm especially concerned about the loans (yes, overdraft is a temporary loan) from the third parties overdraft account (who is technically your creditor). This could be creating, as mentioned, a creditor-debtor relationship and if these are significant amounts... I worry for you.

I worry because you may not be able to distinguish what's what and you are going to get a LOT of questions on this... unless the Trustee is so disinterested. To be in a Chapter 13, you need to have regular income, and your income seems... irregular.

Did you file pro se?

[HHM]

Let's back up and clarify a few things.

Ok, you are self employed. When someone pays you for whatever it is you do, who do they write the check too, you personally, or the LLC?
Funding the business from a personal account is problematic, but that issue is beyond the scope of this thread or question at hand.

[lolly]

For add'l clarity:

Issue #1: Mom pays $275/mo toward our total budget. When/if we have been overdrawn in checking, the overdraft protection deposits needed funds. They used to come from our savings when we had savings, and now is her account (which has all of our names on it).

Issue 2: Yes, when I earn SE income, I get a check and sometimes cash and deposit to LLC. If I have to pay sub-contractors in advance of cleared funds, I will sometimes deposit my pers funds so I don't bounce any checks to contractors. Once I receive good funds, I sometimes return it to pers acct. Ttee asked for 6 mo proof of inc and when she saw multi-source types, asked for bank stmts, and a form called Monthly Financial Report of Business Debtor - for 6 mo prior to filing date to current. This is what I'm preparing now, and not sure how to position the funds I have provided personally.

Issue 3: Husband is self-empl freelancer w/o separate bank acct, so instead of proving 6 months of income, ttee asked for P&L and copy of pers bank stmts from 6 mo. before filing to current.

Stats: $125K in unsec debt, a house with current mtg and equity of $88K, and 60 mo plan calling for $273/mo.

At time I consulted with att'y is was Aug '08. He was going to file 2/09 and then extended it to 4/09, so the numbers didn't makesense in terms of recent income. Then ttee asked how this year looked for my husband and we said we were hopeful it would be as projected. Though the income form says "projected monthly income" they view as etched in stone.

I'm whipped...I hope this makes sense to you. Thanks in advance for listening.

[justbroke]

Just sounds complex to me. I'm probably just making you worry more than actually providing anything useful.

[Ifonly]

I can't tell you how to treat those funds on a balance sheet since I would be giving "professional advice" (I'm a CPA) but I can tell you that you need to have an accountant or a CPA handling the preparation of those forms, your balance sheet and your P&L. It's ALWAYS a good idea to have an accountant come in and do your books at least once a year (end of year review, compilation of your income and expenses). In this case, it's essential you get it right.