Business ch7...need help

[nodollarsnomo]

We went to see a lawyer on Friday and I am more confused than ever. She looked over our personal tax returns and bank statements, but since my husband has not been drawing a salary from the company things looked strange. I did not take anything relating to the business because I thought we would be doing a personal bk. She said that if we could prove that at least 50% of our debt is business related we would not have to prove income. My question is how do we prove the debt is business related? Only two of our cc's actually have the business name on them the rest are in my husbands name but were used for the business. Do we need to show receipts for all the purchases or the cc statements? This goes back from the last 4-5 years. I'm afraid if I request copies of statements that this will send up a red flag to the credit companies. If anyone has had a similar experience your input would be appreciated.

[southernbelle]

When I filed my business Bk, my situation was a bit different. I also had to prove that over 50% of my debt was business related, but I proved that with bills from vendors and anything I owed as a result of closing my business. I also owed back business taxes that brought my total numbers to like 65-70% business debt (even with my house included).

Your atty. was also correct. If more than 50% of your debt is from your business, you do not have to take the Means Test (707B), however your schedules I and J must be close to zero or pretty low so that it doesn't show that you have lots of disposable income because you could still get pushed into a chapter 13. In my case I was over the median income for my state by quite a bit, but it didn't matter because I was a non-consumer BK and I had very little disposable income from Schedules I and J.

When you gather your paperwork, you will only need to go back 6 months. With my Trustee I had to provide everything going back one year because of the business.

Even though you are filing a business BK, you will need to provide the business information and in my case that meant submitting tax returns and copies of bank statements. Technically, you are correct if you file a personal BK, they should not need the business info., but they will need to know some financial details from the business to get a more complete overview of your financial situation. Chapter 7 is a snapshot into your finances at the time of your filing and if you have records going back 1 year, you'll be fine.

Hope this helps. It's just what I've learned from my experience anyway. Most of my knowledge from non-consumer BK's came from this Forum. In most of my initial atty consultations, I felt that I knew more than some of the atty's that were trying to force me into a Chapter 13 until I found my atty who was great. Good Luck.