Chapter 13 + Own Business

[AZGuy23]

I have been doing all the reading I can and understand about the means test and all the other aspects but one that I haven't been able to find out about is the business assets/bank accounts.

The business is setup as a corporation with it's own tax ID, so while my wife and I own the business, it would not be classified as "self employment" I don't think. So my question is...how is money that is in the business bank account looked at under Chapter 13?

The reason I ask is because I understand that whatever assets you have on the day of filing is the minimum amount you have to pay back under the Ch. 13 payment plan. We personally have $3,000 in a personal account (well actually the money is on hold at the bank due to a judgment garnishment) but also have $12,000 in one business bank account and another $4,500 in another account used for business.

Will that $12k + $4.5k be taken into account as personal assets or since they are the the business' money, they won't be?

[despritfreya]

AZG,

Your attny should go over this with you but, if the cash belongs to the entity, it is an asset of the entity. You have to list the entity on Schedule B and then place a value on it. The entity bank accounts (unless you are a co-owner) are not listed on Schedule B as they are not in your personal name. The value of the entity is typically determined like this. . .

If you were to shut the business down, sell ALL of its assets, use the sale proceeds and the funds in the bank to pay ONLY entity debt, would there be anything left over? As a debt, you have to include any long-term commercial leases in this formula. This is how you determine the "liquidation value" of your stock/membership in the entity. If the answer is "no" then the entity has no real value. If the answer is "yes" then the amount so left over is how you value it. This formula normally works, however, your Trustee will most likely want to see entity tax returns (if applicable) and balance sheets to verify that the debts of the entity exceed its assets (if the value is $0).

As to the income, unless you pay yourself just like an employee (regular payckecks), you will be filing monthly business operating reports. The only way the Trustee can track your income is by seeing a monthly P&L for the business. It is a one page form and not a big deal. I think you are in Maricopa County. Below are the links to the two Trustees. You will be assigned one of them once the case is filed:

http://www.chapter13.info/default.asp

http://www.maney13trustee.com/

You can find information regarding self employed debtors on both sites.

Des.

[goon]

http://www.chapter13.info/default.asp

http://www.maney13trustee.com/

You can find information regarding self employed debtors on both sites.

Des.

Des, As a side note thank you for posting these, I had one of the two, but not the one I really needed, there is some interesting specific information on these
(sorry for the slight thread hijack)