Considering filing Ch 13 but self-employed and have a few questions

[suuzeeQ]

Hi, I feel blessed to have found this forum, there is a lot of good advice and information here. My husband and I are looking into our different options right now and Ch 13 is one of them. We just are not sure how it is going to go because we are self-employed and don't have a regular income, it fluctuates every month and year. Our gross income is like a roller coaster, one year up, the next down, then up again. So will they take an average of the last few years to estimate our monthly income? We also have a lot of business expenses each month/year that we cannot cut out as without them we wouldn't be able to do our work (i.e. internet, phones, yearly & monthly dues/fees, business insurance, car expenses, etc). We have some equity in our home that would help us pay off some of our accumulated debt, but with being self-employed, refinancing is extremely difficult. So far we have been able to keep up on our minimum payments, but we are not able to make a dent in the principle. We wanted to be able to get out of this hole ourselves, but it's looking more like we are going to need help to do it. We are not delinquent on any bills, but Jan and Feb are generally our slowest months and so we are thinking of trying to contact our cc companies and ask if we can just pay the interest on the cards for the next couple of months. If we file BK does the cc interest % get negotiated down (our avg is 15%)? Do we stop making payments on the cc until we file and get a payment plan worked out? I've been doing some research, but I'm still not quite clear on all the ins & outs. Would we have to include all the cc's or can we keep 1 for business? We want to pay back our debts 100%, we are not looking for a free ride. Right now our avg income and our monthly bills are a net, not taking into acct food or gas. So we have no wiggle room right now. There is just the 2 of us and we live fairly frugal, no cable, minimal food bill, 1 car payment, 1 car owned outright. CC debt is approx 100k, mostly business related, but sole-propieter, not an LLC so can't file for business BK. Any advice or options would be appreciated. Thanks

[TheBajan]

Welcome to the forum!

There are a lot of people here more qualified than I am to answer your questions but I can help a little. First of all, yes, you do have to list all of your creditors when you file. Even if you don't have a balance on a card, they will probably close your account once you have filed. Second, once you file, it doesn't matter what your interest rate was on your cards. Your balance will be based on the claims submitted by your creditors. Third, your income will be based on the past six months. I'll let others with more knowledge tackle the other questions. This is a great place to learn and get support. Take your time... you have some still.

Best wishes,

The Bajan

[BigJohn]

Any business assets?
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Year of car and value of car?
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What State do you live in?
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Do you have any Accounts Receivable?

[LadyInTheRed]

Welcome to BKforum!

CC debt is approx 100k, mostly business related, but sole-propieter, not an LLC so can't file for business BK.

Not necessarily true. If your debt was primarily incurred for business purposes, you may be able to file a non-consumer Chap 7 without having to pass the means test. Being a sole-proprietor does not disqualify you.

We want to pay back our debts 100%, we are not looking for a free ride.

I suggest you put behind you the perception that you have some moral obligation to pay 100% of your debt. In a Chap 13, you pay as much of your debt as you can afford to pay during the length of your plan. Your plan should give you as much wiggle room in your budget as possible. If you start with a goal of paying 100% of your debt instead of the goal of getting the best possible plan confirmed, you are setting yourself up for a rough 3 to 5 years. That said, depending on how much equity you have in your home and cars and what your state's exemptions are, you may have a minimum amount you must pay to unsecured creditors based on the value of non-exempt assets.

Your income probably will be based on past years' income. How exactly it is calculated could be the subject of negotiation with the trustee.

On the means test, your business income is gross receipts less ordinary and necessary business expenses. Your schedule I should use the same method to calculate income from business. You will need to show a list of receipts and expenses used to calculate the income.

Read the stickies on this board and ask more questions as they come up. But, also start making appointments for free consultations with bankruptcy attorneys. Be sure to ask about a non-consumer Chap 7.

[suuzeeQ]

Income comes in sporadically through the month, every day is a guessing game when the mail comes as to what will be in there. We have a 2010 Dodge with a loan, so no equity there and a 98 Mitsubishi that's worth maybe 2-3k. Business assets are basically our computers, cameras, printer. We live in UT. Are they going to come through the house and take whatever they want to try to sell? We really don't have much. We are trying to sell off what we can that might have some value...sauna, chair, exercise equipment, but other than that we don't have much. How scrupulous are they when it comes to going through all of our financial records.

[LadyInTheRed]

Income comes in sporadically through the month, every day is a guessing game when the mail comes as to what will be in there. We have a 2010 Dodge with a loan, so no equity there and a 98 Mitsubishi that's worth maybe 2-3k. Business assets are basically our computers, cameras, printer. We live in UT. Are they going to come through the house and take whatever they want to try to sell? We really don't have much. We are trying to sell off what we can that might have some value...sauna, chair, exercise equipment, but other than that we don't have much. How scrupulous are they when it comes to going through all of our financial records.

A Chap 13 is not a liquidation like a Chap 7 is. You can keep your assets but your plan must pay unsecured creditors at least the value of any non-exempt assets. Nobody will come to your house unless the trustee thinks you are hiding something or he wants an appraiser to appraise a specific item. You list all of your assets on your petition. Here's a list of Utah exemptions: http://www.legalconsumer.com/bankrup...hp?ST=UT#other

[suuzeeQ]

Thank you, you all have given me some good information.