$5000 disbursement? question

[95kindebt]

My husband has a consulting business as well as his day job. In March he got a 5k disbursement from his consulting business. We spent it on clothes, shoes for the kids and us, some bills, stocked up on food etc.

My question is this: is it looked at as "income" in our 6 months of income (we're meeting with attorney on the 6th)?

If so, are we better to wait until September to file?

He doesn't get these disbursements on a regualr basis, maybe once a year if that.

Thanks.

[lrprn]

So, let me make sure I understand what happened. Your husband has a consulting business and you and he took money out of his consulting business account and paid yourselves $5,000? Do I have that right?

How is your husband's consulting business set up? As an LLC? An S-Corp? Something else? Was there any assumption that you and he would pay the $5K back to the consulting business, or was the $5K a 'gift' from the business?

[95kindebt]

its his "salary" from the business. It's a LLC.

[StartingOver08]

Yes, not only is the $5000 income, the consulting business is an asset in the BK (if you are both filing and he owns the business). Make sure to discuss this with your attorney. The small business BK's are generally a little more complex - especially if you are looking to keep the business active during your personal BK.

[95kindebt]

we are planning on filing a chapter 13, and yes the business is active. We are not planning on filing BK on the business.

[95kindebt]

PLus I thought the whole point of setting up a LLC is that it is a seperate entity, that you can't be sued for personal stuff through it, and vice versa.

[StartingOver08]

The LLC is considered an asset of yours (your husband and whoever owns the LLC).

The BK estate is created when you file and is composed of all of your assets and liabilities. Many LLC's have debt that is ALSO personally guaranteed. This is something you will want to fully discuss with your attorney as it trips up filers.

[BigJohn]

The $5000.00 can look as income. Does the business generate much business? Was the payment made by check or cash?

[95kindebt]

it only generated 20k last year, but looks like this year will be closer to 3k.
Payment made by check

[StartingOver08]

PLus I thought the whole point of setting up a LLC is that it is a seperate entity, that you can't be sued for personal stuff through it, and vice versa.

Yes, most of us thought this!
The LLC does protect you from suits to some extent, but apparently when you are filing a personal BK, the LLC is considered one of your assets (just like a car/house/CD etc).

This is why you need to have a BK attorney that will know the impact of the small business in your filing. Not all BK attorney's are alike - their experience varies widely, just like other professions. Stay away from the BK mill type attorney. Find one that will attend the 341 with you and that has experience filing personal BK's with small business owners - I can't emphasize this enough. It will make a huge difference in the outcome of your case.

[95kindebt]

thanks. The one we are visiting with on the 6th prides himself in not benig a bk "mill" he handles everything personally, and only takes x amount of cases a year. He's been in business 10 years, just doing bk.