Filing chapter 7 due to no income

[chrisandsarah]

Hi, we are new to this site and we hope we get help from you all before we take this decission.

We have read about bankruptcy but every case is or has something different.

Our main concern now, and to start a conversation here is the following:

I wanted to start a new business, and the only thing I did was register the business name and then I had no money to invest on it so I just kept the name of the business and wait to see if eventually I could have found a way.

So then I applied for 2 cars with capital one and my proff of income was a paystub stating what the business was going to be making per year. We called and double checked that that would work and they agreed. So we got the cars and started making payments.

Since we never found money to invest on the business then our bills started to overflow and now we were looking at bankruptcy as a solution because we dont see a way to start the business yet.
Now the question is, when we file for chapter 7, because Im currently unemployed, are they going to question us how did we get approved and why did we put the ammount we never made? or they do not go over that once is approved?

We dont want to make you read too much but with that question we will go on.. Thank you for your reply

[magyar123]

Who are you referring to by your question "are they going to question us....? The trustee? The trustee could care less.
Don't think Cap One would have any grounds to succeed in objecting to the discharge. They financed your vehicles on the pay data submitted to them at that time. Call it "act of God", divine intervention - or tough s..t, that the business never came off the ground.

[chrisandsarah]

Who are you referring to by your question "are they going to question us....? The trustee? The trustee could care less.
Don't think Cap One would have any grounds to succeed in objecting to the discharge. They financed your vehicles on the pay data submitted to them at that time. Call it "act of God", divine intervention - or tough s..t, that the business never came off the ground.

Yea we meant the trustee or whoever makes the decision on use being able to file chapter 7

[keepmine]

Do you have jobs now? If not, I'd not file until your finances are stablized.

[CindyLou]

Did you give a statement of projected future earnings or did you create a fake a paystub? There is a big difference in the two .....

[chrisandsarah]

Did you give a statement of projected future earnings or did you create a fake a paystub? There is a big difference in the two .....

I generated a paystub with what my hour rate was, no fake, it was my company.

[MomIcantFindmy]

As long as everything was honest.......you have no problem. You even made payments. Check with your attorney but I don't think it is a problem.

[Phillymanhere]

A lot of us (perhaps most people here) get foolishly offered credit without a good income to justify it. So you're not alone--not nearly so.

You do want to run this by a lawyer, though. Set up 3 or 4 visits and give them the details of your situation. Sounds like you were truthful. You presented "anticipated" income as I understand it. The attorneys will give you the best view.

[chrisandsarah]

Yes, thanx guys for the answer.
I have appointment already set with a lawyer to start with this.

Why is it that some say I should get another job before filing chapter 7?
right now what I have is a small business, registered under my name but is 1 month old, it just paid less than $500 this month, is the money I use to keep with the car payments.
Do they require for me to work somewhere in order to be elegible for chapter 7?

[Phillymanhere]

The thinking is that if you don't have a good job, it's gonna be easy to get in financial trouble again. I've read through one study of bankruptcy by a Harvard Law professor who specializes in credit, and she says the people who fell back into trouble (almost immediately) were those who did not have a good source of income at the time of filing.

Or put it like this: without a decent job, how is it possible NOT to fall back into financial trouble? And if you accumulate new debts after filing (which you will if you don't have enough money), then those debts are NOT dischargeable because you already filed.

But perhaps your partner's job is enough to sustain you. This is just a general picture.

As I understand it, you wanna file at bottom but also while you're stabilized and on the way up. Remember: the court usually looks BACK for your income from the previous 6 months ... So you could get a job and file before you get a first paycheck.

But you definitely want to run all this by some lawyers in your area. Good luck.

[epiphany]

The thinking is that if you don't have a good job, it's gonna be easy to get in financial trouble again. I've read through one study of bankruptcy by a Harvard Law professor who specializes in credit, and she says the people who fell back into trouble (almost immediately) were those who did not have a good source of income at the time of filing.

Or put it like this: without a decent job, how is it possible NOT to fall back into financial trouble? And if you accumulate new debts after filing (which you will if you don't have enough money), then those debts are NOT dischargeable because you already filed.

But perhaps your partner's job is enough to sustain you. This is just a general picture.

As I understand it, you wanna file at bottom but also while you're stabilized and on the way up. Remember: the court usually looks BACK for your income from the previous 6 months ... So you could get a job and file before you get a first paycheck.

But you definitely want to run all this by some lawyers in your area. Good luck.

On the other hand, if they were to get good jobs, then might they be forced into a chapter 13 instead of a 7? I would think this would also be a consideration.

Also, to the OP, it may be harder to get a good job after you file.

You need to talk to a lawyer, or two, or three, about your situation in order to find out what will work best for you.

BTW, are you a sole proprietor? I wasn't aware that you could draw an hourly wage for your own company.

ep

[chrisandsarah]

On the other hand, if they were to get good jobs, then might they be forced into a chapter 13 instead of a 7? I would think this would also be a consideration.

Also, to the OP, it may be harder to get a good job after you file.

You need to talk to a lawyer, or two, or three, about your situation in order to find out what will work best for you.

BTW, are you a sole proprietor? I wasn't aware that you could draw an hourly wage for your own company.

ep

Yea sole proprietor, I dont think is a way to do it, not here in the U.S. Im new to the country and in my country there are alot of ways to finance cars/houses, Im learning my lesson the hard way here, but hopefully that wont be a problem at all since everything is honest, payments went to each place untill my pocket really didnt have anymore for me to eat

[JRScott]

The reason to have a job is to prove you can meet your expenses. That is without a job how will you pay for your home/rent, etc.

However it is not necessary to have a job it is usually beneficial to wait until you have one in case further debt is generated prior to getting a job.

[Cali]

You can't make a paystub for a business that hasn't generated money.

BTW, are you a sole proprietor? I wasn't aware that you could draw an hourly wage for your own company.

ep

[FreshLikeADaisy]

You can't make a paystub for a business that hasn't generated money.

Actually, Cali, you can. Whether you're operating off of investment capital or actual income, part of your business expenses is always going to be payroll. If you own the company, you'd be at the top of the list. Whether it's a formal payroll setup or just money you set aside for your living expenses, if you run it through the company it's still a paystub.

To be honest, I am not familiar with the differences between sole proprietorships, LLCs, and other business structures, so there may be limitations I am not aware of based on that particular business model. But in the end, if your income comes through the business -- whether the business makes any money or never has -- it's still a paycheck. If it was money you kept in your personal bank account that you never commingled with your business funds, then it's not, it's just your savings. It all depends on how you set up your business finances.

I'm sure someone else could give you more details, but that's my understanding of it, anyway.