I'm new here - facing 13 and devastated

[rcoveles]

Hi all - I'm new here. I'm facing Chapter 13, and have an appointment with a lawyer next Friday. I was originally looking at Debt Settlement companies - they all made it sound so appealing. I even selected one and they sent all the paperwork over to me. As I was reading the fine print - like 15% of total debt fee (in my case, 175k - all unsecured CC, loans and LOC - so 25k in fees), I started to explore other options. Then I heard all of the horror stories, but the biggest thing that stood out to me - no protection whatsoever. No thank you.

I have so many questions. This is all on me - my wife had nothing to do with it. All of the cards are in either my name or my business name, and all debts were incurred in the course of my business.

I feel so lost right now. I didn't sleep and I haven't eaten. I can't concentrate. This has been the worst year of my life, and it continues. My mother-in-law and sister-in-law both died, then MY mom died, then my cat died, along with some other personal problems. I really didn't think I could take much more..now this.

I want to keep my business running. My biggest problem has been a decline in sales over the last year. They're about half of what they used to be. In fact, my gross sales don't even exceed my debt payments at this point. I knew things were bad, but I should have been really keeping a closer eye on things. I had a line of credit under my account, which was getting dinged all year when I went below zero - now, that too is maxed out, and my balance is zip. Two payments bounced this week, so I figured I have run my course doing "business as usual." I have about a grand in my paypal account, but I really need about 5 to make it through the next month, so I was thinking of taking a hardship loan on my SEP IRA..probably not a good idea, but I don't know what else to do?

The lawyer I talked to today said it sounds like a 13, just based on our median income (my wife makes decent money).

I only want to include MY cards, and not the house mortgage or anything else. Both of our cars are paid off, though getting old (mine is a 1996). We owe approx 40k on our home, which should be paid off in 4 years or so.

I assume they're going to base a lot on our budget, what she makes, and what I pay myself through a draw. We're pretty much paycheck to paycheck, though we do save money in our retirement accounts every month (will that be allowed?)

If I could just ask a few questions for starters..please bear with me.

1. Basing my payment % off what my biz is bringing in on average and all other factors - what if that changes in the future? What if I get a job, or business picks up - does my payment change?

2. Inventory - since I need my inventory to continue doing business - how will they treat it? Will it figure into the calculation as an asset, and how is it valued? I have roughly 265k at retail, and I would estimate maybe a third of that is cost.

3. Since we have all joint bank accounts and mortgage and most everything (except my stupid credit cards) - do they factor in like half of that stuff, and are all accounts included (IRAs, Investments, Checking & Savings).

4. Based on my numbers..do you think I'll get a 3 or 5 year term? I know, probably not enough info, but figured I'd ask.

Sorry for rambling. I just feel sick..like I've let my wife down and myself down. I blame no one but myself.

[woeisme]

I'll take a stab at some of your questions.

I only want to include MY cards, and not the house mortgage or anything else. Both of our cars are paid off, though getting old (mine is a 1996). We owe approx 40k on our home, which should be paid off in 4 years or so.
You don't really get to decide what to include,unless you plan on filing single, not joint. Even then, anything in your name, even with her as co-signer, gets included in the plan.
I assume they're going to base a lot on our budget, what she makes, and what I pay myself through a draw. We're pretty much paycheck to paycheck, though we do save money in our retirement accounts every month (will that be allowed?)
Most trustees allow retirement savings, although there may be limits on how much you can put in the accounts.
If I could just ask a few questions for starters..please bear with me.

1. Basing my payment % off what my biz is bringing in on average and all other factors - what if that changes in the future? What if I get a job, or business picks up - does my payment change?
Yes, your payments may change as circumstances change. Most trustees don't care if your income increases by less than 10%, but increases over that are typically cause for a plan modification. Same goes for drops in income, can also get plan modified if permanent negative change occurs. Owning your own business, I think the trustee will scrutinize your earnings every year pretty hard, sorry to say.
2. Inventory - since I need my inventory to continue doing business - how will they treat it? Will it figure into the calculation as an asset, and how is it valued? I have roughly 265k at retail, and I would estimate maybe a third of that is cost.
sorry, not an area I know anything about.
3. Since we have all joint bank accounts and mortgage and most everything (except my stupid credit cards) - do they factor in like half of that stuff, and are all accounts included (IRAs, Investments, Checking & Savings).
all your income/assets and wife's will be considered.
4. Based on my numbers..do you think I'll get a 3 or 5 year term? I know, probably not enough info, but figured I'd ask.
If you are over the median income for a family of your size, it will be a 5 year plan, unless you are paying so much that you pay 100% of all debt in under the 5 years, which is not a very common thing.
Sorry for rambling. I just feel sick..like I've let my wife down and myself down. I blame no one but myself.

Time to stop with the blame, and start with the changes. Millionaires have had bankruptcies, and smart hard-working people are victims of the economy. Don't let this be an emotional decision, but rather a business decision. Best of luck, and keep posting your questions as they occur. Check out the stickies for lots of great info. This site has been a godsend to me, the people on it are really helpful.

[frogger]

Sorry for rambling. I just feel sick..like I've let my wife down and myself down. I blame no one but myself.

You've taken the first step towards getting better, so get over the sick and let down feeling. It's happened to us all.

Once you get started with the process, you're going to find a tremendous amount of relief with your situation.

A couple of questions for you:

1. Does your wife know what's going on?
2. What type of business structure do you have? (Corporation or not?)

[rcoveles]

You've taken the first step towards getting better, so get over the sick and let down feeling. It's happened to us all.

Once you get started with the process, you're going to find a tremendous amount of relief with your situation.

A couple of questions for you:

1. Does your wife know what's going on?
2. What type of business structure do you have? (Corporation or not?)

Yes, she does know. She's been very supportive, but I know she's concerned.

My structure is an LLC, with many of the cards in the business name, but also in my name, so essentially, I'm a sole proprietor for these purposes.

[rcoveles]

I'll take a stab at some of your questions.



Time to stop with the blame, and start with the changes. Millionaires have had bankruptcies, and smart hard-working people are victims of the economy. Don't let this be an emotional decision, but rather a business decision. Best of luck, and keep posting your questions as they occur. Check out the stickies for lots of great info. This site has been a godsend to me, the people on it are really helpful.

Thank you. I know..I do realize that, but I don't want to blame the economy or this or that. I let it get out of control..only myself to blame. I know I'll feel better (I HOPE!) after this thing gets going. I'm sure to have MANY more questions. I've been looking around all day pretty much. My head is spinning.

[frogger]

Yes, she does know. She's been very supportive, but I know she's concerned.

My structure is an LLC, with many of the cards in the business name, but also in my name, so essentially, I'm a sole proprietor for these purposes.

No, you're not.....

Your LLC is an asset that belongs to you. You are not going to be able to exempt the corporation or any of its assets, so you are going to need to do some planning.

For your corporation to continue doing business is not the main concern of the trustee. The trustee is there to make sure that the secured lenders get the maximum dollars.

You are going to need to get with a competent bk attorney that does business matters for advice on how to handle this. If the majority of debt is in the LLC, perhaps you don't want to bk at all, just close the doors on the LLC and start back up again later.

Don't do anything drastic, don't try to do any title changing or property transfers, and don't try to hide anything.

That's my advice for starters. We'll talk about this more I'm sure.

Good luck to you and be thankful for a good wife.

[Limitman]

I have been where you are now emotionally about a year ago now. I had to let some things go and it hurt but they are just possesions. Your wife standing behind you means alot. I decided to file last year at this time and it took all the way until September to actually file and then my plan confirmed in December. It has been the greatest weight lifted off my shoulders I have ever felt. My biggest and only regret is not filing sooner. Why did I wait so long and waste so much money......even with one third of my wages garnished I have more money now than I have ever had in my life. The greatest feeling is knowing that in 5 years, like paying for a car, it will all be over and I will have zero payments. That in itself is amazing cause paying credit cards the old way I would have been paying them off until I retired or maybe longer and that's 30 years from now. I hope this helps you and good luck!

[frogger]

I have been where you are now emotionally about a year ago now.

Same for me.

I had to let some things go and it hurt but they are just possesions.

I agree 100%

Your wife standing behind you means alot.

With your wife behind you 100%, you're going to come out of this a better man, a stronger, man, and a man with a better relationship.

It has been the greatest weight lifted off my shoulders I have ever felt. My biggest and only regret is not filing sooner. Why did I wait so long and waste so much money.....

Many of us wonder this same thing. Why did we wait so long...

You're not in this alone. Many of us have worn those same shoes.

[rcoveles]

No, you're not.....

Your LLC is an asset that belongs to you. You are not going to be able to exempt the corporation or any of its assets, so you are going to need to do some planning.

For your corporation to continue doing business is not the main concern of the trustee. The trustee is there to make sure that the secured lenders get the maximum dollars.

You are going to need to get with a competent bk attorney that does business matters for advice on how to handle this. If the majority of debt is in the LLC, perhaps you don't want to bk at all, just close the doors on the LLC and start back up again later.

Don't do anything drastic, don't try to do any title changing or property transfers, and don't try to hide anything.

That's my advice for starters. We'll talk about this more I'm sure.

Good luck to you and be thankful for a good wife.

I am. She deserves better than this.

As for just closing the doors - That would be great, but unfortunately, although most (not all) of the cards have the LLC name (and in some cases, my name as well), my SS# is on ALL of them. From everything I've read, that pretty much makes ME responsible. Believe me, I started the LLC to avoid personal liability, but I guess I didn't research it enough. I'd love it if you were right, but everything I've read says I'm on the hook Heck, If I could get a decent price for the biz, I'd love to just wash all of this away, but I don't think anyone is buying right now.

[frogger]

I am. She deserves better than this.

Deserves better than what? A man that is trying to do the right thing to take care of his family.

I don't think so........

First thing you need to do is stop beating yourself up over this. $hit happens to all of us, much of which is beyond our control. You're not the first one that this has happened to, and you're certainly not going to be the last.

You really need to consult with a good bk attorney to see what your options are. Most likely, you're going to need to file personally to get rid of the personal guarantees, but you do what you've got to do.

Don't think you're less of a man for doing this. You're only a failure if you refuse to take charge of your life and just lay down and quit.

You've got a wife that is counting on you and she will love you ever more for taking charge of your situation at this time. It's not pretty, but it will make your relationship stronger.

Good luck. We'll help you any way we can.

[tigergem]

Hey rcoveles. Please don't blame yourself. Look at it as just another business decision. My Chapter 13 will be the best thing that ever happened to my budget (unless I win the lottery or something) and I am not the least bit sorry I filed. Neither should you be. Sorry for all your hurt and troubles, but this, my friend, is BUSINESS. Just do it.

[indebt00]

I am. She deserves better than this.

As for just closing the doors - That would be great, but unfortunately, although most (not all) of the cards have the LLC name (and in some cases, my name as well), my SS# is on ALL of them. From everything I've read, that pretty much makes ME responsible. Believe me, I started the LLC to avoid personal liability, but I guess I didn't research it enough. I'd love it if you were right, but everything I've read says I'm on the hook Heck, If I could get a decent price for the biz, I'd love to just wash all of this away, but I don't think anyone is buying right now.

I can't give you too much help here but I do know that if you personally guaranteed your business credit cards (gave your ssn) then you can include that debt in your bk....even if the business has a EIN and is on the card...YOU personally guaranteed it.
I am not sure how this helps...just thought I would let you know

[rcoveles]

Hey rcoveles. Please don't blame yourself. Look at it as just another business decision. My Chapter 13 will be the best thing that ever happened to my budget (unless I win the lottery or something) and I am not the least bit sorry I filed. Neither should you be. Sorry for all your hurt and troubles, but this, my friend, is BUSINESS. Just do it.

I'd like to think that. Only time will tell I guess. Did you continue your business?

[rcoveles]

I can't give you too much help here but I do know that if you personally guaranteed your business credit cards (gave your ssn) then you can include that debt in your bk....even if the business has a EIN and is on the card...YOU personally guaranteed it.
I am not sure how this helps...just thought I would let you know

Thank you. I'm just concerned now about this whole LLC thing, and whether I'll have to file twice, or what the deal is. I'm meeting a guy on Friday, but I may try to talk to someone else before that.

[frogger]

Thank you. I'm just concerned now about this whole LLC thing, and whether I'll have to file twice, or what the deal is. I'm meeting a guy on Friday, but I may try to talk to someone else before that.

I'm filing twice. Once personal, once for the corporation. Many people don't consider filing for the corporation necessary, however it is the best way to do an orderly shutdown of the business.

However..... several months ago, I did set up another corporation that can and will continue to do business.

Think, consult, and plan. You can make this work out to the best benefit for you and yours.