New to this.

[syn]

I have some questions about chapter 7. I'm sorry if this is all repeat stuff that has been answered but this is the first time I have encountered this. Well, it's not me filing but my father. He is $140,000 in business credit card debts and owes $30,000 to the IRS, there is currently a federal lien on property he owns.

Anyways, a lawyer my parents went to suggested chapter 7 because he couldn't afford the monthly pay off payments that come with chapter 13. I have read stuff on chapter 7 but I am still confused, would he end up losing vehicle he owns out right? Also my mom's car is in both their names but she doesn't want to lose it. I don't know what the automobile exemption is in my state (Massachusetts) but we were thinking of signing the title over to my name, is that illegal?

Also the lawyer said that even though my dad's name would be protected under chapter 7 his business wouldn't. The lawyer also said that a creditor could come down the pike in a year or two and shut him down, is that also true? I never heard of anything like that.

[BassBoy]

Not a business BK Guru, however I can tell you that it is a big No-No to transfer any assets before filing BK. If your Father/parents own their cars, they could be exempted, depending on the exemption values and/or wildcards. On the other hand, if there's some value to the vehicles, your parents could pay the value of the cars to the Trustee and keep them. Either way, it's pay the value or lose the vehicles to the Trustee...............again, if there's some value there.

IRS liens/debt is usually non-dischareable, so the $30K can be collected even in a Chapter 7 BK.

[JRScott]

I believe the allowance in Massachusetts is 700 dollars per vehicle, however I could be wrong about that but the lawyer could be able to answer. Yes if his name is on your mom's car too they can come for it too.

DO NOT TRANSFER OR ALLOW YOUR FATHER TO TRANSFER ANY PROPERTY TO YOUR NAME OR ANYONE ELSE'S NAME.

The reason for this is that unless he gets fair market value at the time of the transfer for said property the trustee can and will undo the transfer of the property. The Trustee can go back 2 years initially and can go back further if he feels there is cause.

Depending on how it is incorporated the lawyer is telling the truth probably. So long as its incorporated as something other than a sole proprietorship then though your father would absolve his personal responsibility with a ch 7 his business would still be liable. There are others that have dealt more with business and maybe they'll come by.

Depending on the nature of the tax debt it is also likely not dischargeable.

[syn]

Thanks for the tips. He's trying to sell the property the lien is on so if he can then the lien can be gone. I don't know what he's going to do. The only car that isn't paid off is his. Maybe he should do chapter 11 so he won't lose anything but then again he can't afford it.

I don't know what to tell him!

[syn]

Instead of me making another topic I just have one more question:

I know whatever you sell the proceeds has to go into whatever your keeping. One in which in my case is the house and I know you can use it for home improvements but can you use proceeds on a sale to pay the taxes?

[StartingOver08]

If you are selling something prior to the BK it is better to use those funds to pay the IRS taxes because they are non-dischargable. You could also pay the BK attorney fees.

I think there might be a problem with the filing if you put the sale proceeds in the house.

As to the Business - I am experiencing that issue right now. I also have a S corp and I filed CH 7 BK personal. All the A/R of the S corp as of the date of filing belong to the trustee. The debt of the S corp is dischargable against me personally but the S corp still owes it. After the stay the creditors can get judgments against the corp and sieze and future income the corp has to satisfy the judgment. I would have to close the corp in order to prevent that from happening.

[syn]

Thanks.


My dad was devastated to hear his business wasn't safe. After 30 years of being in business with the same name and location it's hard to hear. I hate that after this bankruptcy thing is over that he would have to sit and worry everyday that would be the day he would be shut down. If he loses his equipment then he's done.

[StartingOver08]

You need to talk to an attorney about that aspect.

My S corp is solely owned by me. So the trustee considers my S corp an 'asset'. That is why the receivables belong to the trustee as of the filing date. Income earned after the filing date is the corps - that is why the cc's in the business name with the personal guarantee can go after the business. Because only the personal guarantee part is discharged in a personal BK 7.

Your father's business has equipment (assets). The trustee probably will want the assets if he owns the corp 100%. I do not know what happens in the case of a partnership or some other form of ownership. I can only tell you what is happening to me.

BTW, I had to supply 2 yrs bank stmts, 4 yrs tax returns, 10 yrs deeds/mortgages for real property, 3 yrs cc stmts etc. In short, you have to document all.

[syn]

He's sole owner and he is incorporated.

It all makes sense now. CC's don't let you get away with anything, huh? He's been flip flopping around with what to file. He is going to be getting an opinion on a third lawyer on 10/29. First lawyer said file chapter 13 the second said chapter 7. The first lawyer never said anything about him losing the business but the second one said he could lose it no matter what he files.

Both lawyers said they needed pretty much everything you just mentioned, plus he would have to complete an online credit course.

[StartingOver08]

He's sole owner and he is incorporated.

It all makes sense now. CC's don't let you get away with anything, huh? He's been flip flopping around with what to file. He is going to be getting an opinion on a third lawyer on 10/29. First lawyer said file chapter 13 the second said chapter 7. The first lawyer never said anything about him losing the business but the second one said he could lose it no matter what he files.

Both lawyers said they needed pretty much everything you just mentioned, plus he would have to complete an online credit course.

Yes the online credit course is mandatory to file now. It is a good thing to talk to another attorney. Make sure to visit the trustee web site too so you can know what questions to ask of the attorneys and of course you can ask any question here. There is a lot of good info in the search feature here.

Your Dad may be able to file personally, close the corp, reopen another corp with a d/b/a as the old corp name. That is a question for the attorney.

[syn]

Yes the online credit course is mandatory to file now. It is a good thing to talk to another attorney. Make sure to visit the trustee web site too so you can know what questions to ask of the attorneys and of course you can ask any question here. There is a lot of good info in the search feature here.

Your Dad may be able to file personally, close the corp, reopen another corp with a d/b/a as the old corp name. That is a question for the attorney.

Okay, thanks.

That would be nice if he could do that. I'll tell him about it to ask the next attorney he is going to see. What does d/b/a stand for? I'm not business savvy, lol.

[BKdinOhio]

Mass can claim Federal Exemptions

For the cars Google search your state and bankruptcy exemptions.

Based on the 2 sources I saw is that the State has a $700 vehicle exemption, BUT he can also claim Federal Exemptions being in Mass. which is something like $3400 (not sure of the exact amount).

Being business debt though definitely talk your atty to clarify anything.

Write down any questions that you both aren't sure about and get an appointment with the atty find out what's what. He/She will know the in's and out's of your particular district and hopefully the trustee that your father is assigned.

[StartingOver08]

d/b/a = Doing Business As

There are corp's that are named for example XYZ Corp d/b/a Carl's House of Blues (just a crazy example). The point is, the name you advertize is easy an descriptive but may not be avail as a corp name. It is frequently done, but you would discuss strategy with an attorney. In your fathers case if he has a name that he has used for 30 years he wants to keep that business name but not necessarily the corp. This can get sticky, so talk to the attorney about it.

[rockyroad]

what about being a SP? That biz wouldn't ever be liable for anything would it, being it and the individual are one and the same??? Would you have the A/R issues or have to close it???

[syn]

For the cars Google search your state and bankruptcy exemptions.

Based on the 2 sources I saw is that the State has a $700 vehicle exemption, BUT he can also claim Federal Exemptions being in Mass. which is something like $3400 (not sure of the exact amount).

Being business debt though definitely talk your atty to clarify anything.

Write down any questions that you both aren't sure about and get an appointment with the atty find out what's what. He/She will know the in's and out's of your particular district and hopefully the trustee that your father is assigned.

Oh I didn't know about the federal exemption. I had googled about Mass. and all it said was $700. I'll definently have to write down questions for this lawyer, this is the final one he is going to meet before he makes his decision on what he is going to file.