Self Employeed & 6 Mos Income Question

[ansky0007]

Ok, Here is my deal and I want to make sure my lawyer is correct.

I am a sole prop and we are getting ready to file for CH7, We expect our 6 months income 5/1 through 10/31 would put us at around $38k which x2 is less than the means income of $84k for a family of 4.

My question is if we file the first week of November and lets say they schedule the 341 for January, Will the Trustee ask for updated financials for 6 months including November & December? My lawyer is stating that they will not.

My concern is that November & December are our busiest months of the year with holiday shoopping (If the economy allows) December we usually make double our normal monthly profit.

If they do ask for financials for November & December 6 mos would put us over the means even through YTD January - December would be well under the limit since we usually loose money in the first few months of the year since our business only does well in the summer and holiday season.

Anyone know about updated income at the 341? If there is a chance that they will request it we will have to wait 3-4 more months to file since the losses in January-March will erase all the holiday shopping profits.

[southernbelle]

I have not heard of a Trustee asking for updated financials. If the Trustee asks for something like that, it seems to me like there would be some special circumstances that would make them do that and if they do, there's probably some type of fraud they are sniffing out. I'm sure someone else will chime in, but it seems like that possibility is low.

By nature, a chapter 7 is a financial snapshot of your finances at the time of filing. They take a 6 month look back from that date and use that information. Now that doesn't mean you can go out and buy a new flat screen the day after you file, but if your normal income fluctuations happen, you can plan to file on a certain date to put your financial picture in a better light to benefit you.

For example, I filed after I used all of my tax refund money for bills and the day prior to my direct deposit paycheck. The reason for that is, if I waited to file after my check hit the bank, that money would have been up for grabs by the Trustee (so would the refund check before I spent it). So I planned the timing of my filing. There's nothing illegal about that, I just kept receipts for the money spent from the tax refund. Also, if your attorney doesn't believe that the Trustee will ask for it, then I would trust that info. because he deals with them all the time. For your own piece of mind, you can call some other BK attorneys in your area and ask them the same thing just to see what they say too.

Just as a sidenote, most businesses make more during the holiday months and I'm sure BK's increase just prior to the holiday season and just after tax refunds have been spent. And the Trustee can't tell you to wait to file. You file when you are ready, and only your atty can give you guidance about a better time to file, but no one can tell you that you can't file.

[BKParalegal]

BK is a snapshot of your life on the day you file. Outside of windfalls(i.e. lottery winnings, inheritance) the trustee cannot factor in events that are through the normal course of doing business. The new BK code included the 6 month look back, you can't be penalized for timing your filing to not include more profitable months.

Good Luck

[ansky0007]

Great... I just wanted to be sure what he said made sense. YTD the business will do approximately $70k, Means is $84k for my size family and right now we are at $38k for the past six months.