Worried about BK & Self-Employment and recent Balance Transfers, Please Help!

[Violet]

Hello,

Basic facts:

Debt: $34,000
Mininum Monthly Credit Card Payments: $575
Income: about $1000 a month (this is gross, not net profit) until next month, when I will have no income at all.
Last credit card usage: Did balance transfers of $1700 on October 3, 2008

I have been self-employed for five years, selling CDs and books on eBay. I did okay for the first two years, but business has been increasingly bad for the past three years. I've decided to stop throwing good money after bad and file Chapter 7. I used my credit cards to buy stock and pay for business expenses and life necessities when my business started failing. Virtually all my charges over the past 3 years are for business or necessities like groceries, gas and car insurance. I don't think I have any charges since late 2005 that can be considered "luxury" charges. I haven't opened a new credit card account since 2005. Up to this point I haven't had a single late or missed payment, and my FICO score is over 700. The problem is that I will almost be completely out of money next month. I have run out of things to sell, and I don't think it's worth it to use my credit cards to buy more stock. I live in Michigan, where it's virtually impossible to find a job. I made my last credit card payments this month. I will sell off my remaining stock in January, and talk to a lawyer by the end of the month. I moved in with my parents a year ago, and as you can see I don't even have money to help them out with rent now. I have been making barely enough to make my credit card payments.

I'm worried about a couple of things. First, my income after expenses has been extremely low the past 3 years, and I was still using the credit cards for business and necessary expenses. I was probably charging $500 a month on average until February 2008. Then I stopped using my cards completely except for June to September for business expenses. My income as stated on my tax returns over the past few years is the following:

2008: probably less than $4,000
2007: $1,500
2006: $10,000

I never had any intention of filing bankruptcy when I used my credit cards. I always thought I'd find a way to make the business work and pay the money back, but it got away from me. My income over the past two years is so low because I've been selling off old stock at a loss. Are my creditors likely to come after me for using my cards while my adjusted gross income was so low? Is the trustee likely to give me trouble about this? I was charging a lot, but it was all stock and business stuff. I have all my receipts, but I haven't kept the most detailed books. How much documentation do I need to produce when filing as self-employed? How far back will they go? Will they want to see bank records more than a year old?

The other thing I'm worried about is a couple of balance transfers I did on October 3. One of my credit cards raised the rate to 29%, so I did some transfers to a card with a lower rate. I didn't decide to file BK until this month. My first missed payments will be in January; 90 days after the last transfers or charges. Is this enough time, or will they show up at my meeting and protest?

I will be seeing a lawyer in a few weeks, but it would help me to sleep at night if anyone could share some experiences or advice with me. Also, can anyone suggest a good bankruptcy lawyer in the Downriver/Downtown Detroit area? I'm thinking of trying Walter Metzen, since he specializes in bankruptcy.

Thanks,
Violet

[TEW]

Hello,

Basic facts:

Debt: $34,000
Mininum Monthly Credit Card Payments: $575
Income: about $1000 a month (this is gross, not net profit) until next month, when I will have no income at all.
Last credit card usage: Did balance transfers of $1700 on October 3, 2008

I have been self-employed for five years, selling CDs and books on eBay. I did okay for the first two years, but business has been increasingly bad for the past three years. I've decided to stop throwing good money after bad and file Chapter 7. I used my credit cards to buy stock and pay for business expenses and life necessities when my business started failing. Virtually all my charges over the past 3 years are for business or necessities like groceries, gas and car insurance. I don't think I have any charges since late 2005 that can be considered "luxury" charges. I haven't opened a new credit card account since 2005. Up to this point I haven't had a single late or missed payment, and my FICO score is over 700. The problem is that I will almost be completely out of money next month. I have run out of things to sell, and I don't think it's worth it to use my credit cards to buy more stock. I live in Michigan, where it's virtually impossible to find a job. I made my last credit card payments this month. I will sell off my remaining stock in January, and talk to a lawyer by the end of the month. I moved in with my parents a year ago, and as you can see I don't even have money to help them out with rent now. I have been making barely enough to make my credit card payments.

I'm worried about a couple of things. First, my income after expenses has been extremely low the past 3 years, and I was still using the credit cards for business and necessary expenses. I was probably charging $500 a month on average until February 2008. Then I stopped using my cards completely except for June to September for business expenses. My income as stated on my tax returns over the past few years is the following:

2008: probably less than $4,000
2007: $1,500
2006: $10,000

I never had any intention of filing bankruptcy when I used my credit cards. I always thought I'd find a way to make the business work and pay the money back, but it got away from me. My income over the past two years is so low because I've been selling off old stock at a loss. Are my creditors likely to come after me for using my cards No they are not going to show up or ask you where or waywhile my adjusted gross income was so low? Is the trustee likely to give me trouble about this?No the trustee wants assets sounds like you don't have any I was charging a lot, but it was all stock and business stuff. I have all my receipts, but I haven't kept the most detailed books. How much documentation do I need to produce when filing as self-employed? How far back will they go? Will they want to see bank records more than a year old?hard to say I don't think you will need much

The other thing I'm worried about is a couple of balance transfers I did on October 3. One of my credit cards raised the rate to 29%, so I did some transfers to a card with a lower rate. I didn't decide to file BK until this month. My first missed payments will be in January; 90 days after the last transfers or charges. Is this enough time, or will they show up at my meeting and protest?your fine you were only trying to lower your payment

I will be seeing a lawyer in a few weeks, but it would help me to sleep at night if anyone could share some experiences or advice with me. Also, can anyone suggest a good bankruptcy lawyer in the Downriver/Downtown Detroit area? I'm thinking of trying Walter Metzen, since he specializes in bankruptcy.

Thanks,
Violet

get some rest stop worrying in 4 or 5 months you will be debt free.
Good luck keep posting

[ready2puke]

Im self employed and my business and the stock market got me in a world of hurt. I cant let go of my business as I dont know what else to do..I understand how you feel and all the anxiety and lack of sleep. I can tell you to read this forum til your blue in the face lol...Not that reading this forum will put you to sleep but it will make you feel a ton better. So keep reading and breath...your not alone. I have to wait also, but Im waiting almost 8 months before I file...the calls will come but dont answer. You'll see when you read up ok..Take a bubble bath, have a sip of wine and go nitey nite...

[philslyn]

hhhmmm stop paying your credit cards since u are intending to file bk.
and when u file bk its better to wait for atleast 3 months or more.
that should be fine specially in your case it will show that u are not really capable on making the payments.
creditors likely to object only if you use ur credit cards for cash advance or pay something with it 90 days before u file. i wud suggest that you buy a nolo book for chapter 7.
and read it, and read this forum ask if you have question coz someone might share what they know. and stop using your cards ofcourse. and just educate yourself more about chapter 7.
when u file bk.
all u need is the bills (which goes to schedule F)
if u have any student loan which goes to schedule E
or any goverment owed taxes.
copy of social security
an id like driver license,
6 months pay stub from the month you are filing, or proof of income within the last 6 months
and 6 months bank statement
house paper if u own a house
car notes
4 years taxes.
thats all we asked. now if you just wait and stop borrowing money and buy the nolo book and reading all the topics here that might help u then u come back to me.

[philslyn]

uummm... thinking about chapter 7

hhhmmm stop paying your credit cards since u are intending to file bk.
and when u file bk its better to wait for atleast 3 months or more.
that should be fine specially in your case it will show that u are not really capable on making the payments.
creditors likely to object only if you use ur credit cards for cash advance or pay something with it 90 days before u file. i wud suggest that you buy a nolo book for chapter 7.
and read it, and read this forum ask if you have question coz someone might share what they know. and stop using your cards ofcourse. and just educate yourself more about chapter 7.
when u file bk.
all u need is the bills (which goes to schedule F)
if u have any student loan which goes to schedule E
or any goverment owed taxes.
copy of social security
an id like driver license,
6 months pay stub from the month you are filing, or proof of income within the last 6 months
and 6 months bank statement
house paper if u own a house
car notes
4 years taxes.
thats all we asked. now if you just wait and stop borrowing money and buy the nolo book and reading all the topics here that might help u then u come back to me.

[Violet]

Thank you all for your answers.

Though I am a non-incorporated sole proprietor, most of my credit card debt is from business expenses. Will this have any influence on how the trustee deals with my case?

Also, I am selling off my remaining stock this month. The only business-related assets I have are my computer, printer, postal scale, and an Azuradisc CD repair machine. I paid about $1500 for the machine four years ago. I'd probably only get 5 or 6 hundred bucks for it at the most on eBay. Should I sell the machine now, or would I be able to keep it? Though I won't have any stock left when I file, I might be forced to sell my own CDs and books later in the year if I don't find a job. Am I required to liquidate everything connected with my business in BK 7?

[AngelinaCatHub]

Thank you all for your answers.

Though I am a non-incorporated sole proprietor, most of my credit card debt is from business expenses. Will this have any influence on how the trustee deals with my case?

Also, I am selling off my remaining stock this month. The only business-related assets I have are my computer, printer, postal scale, and an Azuradisc CD repair machine. I paid about $1500 for the machine four years ago. I'd probably only get 5 or 6 hundred bucks for it at the most on eBay. Should I sell the machine now, or would I be able to keep it? Though I won't have any stock left when I file, I might be forced to sell my own CDs and books later in the year if I don't find a job. Am I required to liquidate everything connected with my business in BK 7?

[Violet]

Are your cards in the name of a business or your own name. It is YOU that is bankrupting, your business is ancillary from that as it is so small. What you make a month, I would not even consider you a business. I don’t see how anyone could complain about you selling your machine as I don’t know how you ever lived on 1k a month. I don’t think you have any problem getting your 7, as in reality, you are below the poverty line right now. ‘Hub

My credit cards are in my own name. I never incorporated.

I don't know whether I should tell the trustee that I've ended my business, or leave it open in case I'm able to restart it later. Of course I'll discuss this with a lawyer within the next month or so.

[AngelinaCatHub]

My credit cards are in my own name. I never incorporated.

I don't know whether I should tell the trustee that I've ended my business, or leave it open to restart it later. Of course I'll discuss this with a lawyer within the next month or so.

WHAT business? I’ve been an eBay member since inception. I may sell a few things here and there and DW buys more than I sell. If you wish to call your “hobby” a business that is fine but picking up aluminum cans could be a business or a pastime. Don’t fence yourself out by insisting it is some kind of business. Don’t talk too much as you really can’t say it is supporting you nor has it at 1K a month. If you can live off that little, I admire you. If you talk it out of your life, in bk, then you may not be able to continue even in a small way, though I doubt it. Not being fresh here, but let’s face the facts, you sold enough to keep busy but not enough to renew stock, nor to call it a survivable business. ‘Hub.

[philslyn]

I agree with ANGELINE HUB!

[Violet]

I don't take offense at what you said. I guess I will let my lawyer instruct me in how to describe/deal with what I've been doing the past five years. It has not supported me for the past two years, even though I've paid at least some income taxes each year I've sold stuff.

[Never_Again]

Hub has it right... your "business" is small potatoes to the trustee.

I do see a bigger problem here. Bankruptcy will make the debt go away, but it will NOT deal with your very low, or lack of income. That is the bigger issue that you must address.

I understand that jobs are had to find in Michigan. Is it possible to move somewhere to get a job? There are places where it is much easier to find a job.

Also, you could probably work yourself out of this situation, but without any short term solutions to increase that income...

If you have never missed a payment, the credit card companies are not going to come after you legally immediately. They will start calling you a hundred times a day, but legal action is still probably at least six months, to possibly a year away. Will you have income in that amount of time?

Best wishes to you in making a good decision.

[Never_Again]

Duplicate Post

[Violet]

I will keep looking for a job in Michigan, as I have no family or money with which to start elsewhere. I think part of the reason I'm finding it difficult to get a job is that I've been exclusively self-employed (or whatever you want to call it) for the past five years. I haven't had a normal job in that whole time. My references are getting sparser, as it's been so long. It will take the sale of the rest of my stock and some of my personal items to come up with the $ to file Chapter 7. I'm also starting a garden this year. I hope to learn enough about gardening over the next few years to switch to something to do with that. As the depression goes on, I think local food production will become more vital. In the absence of finding a job, I think I'll try to keep selling, even if it's only a few hundred bucks a month to help out here at home. At least I won't have the option of using credit to finance it. Never again. As some of my main sources have dried up over the past few years, I think my best bet for restarting my business is combing the garage sales of Detroiters who will be struggling to pay their bills. Of course I won't be the only one who is doing this.

[Kansas1960]

I sold stuff too on ebay and stubhub

Over the last 5 years I have sold stuff that was purchased on debit and credit cards. I never claimed it as a business with the IRS since I did it as a hobby (in my opinion). I have not done any of this in the last 6 months and most of it was done in '06 and '07. I kept no records. I probably sold 200 items and broke even when all is said and done, but I don't know for sure. Average cost of each item was about 75.00. Will I have to give this information to the trustee when he asks if I have been engaged in any business in the past? I could get most of the information from old bank, credit card, ebay, stubhub and paypal accounts. It would be a big headache to try to reconsturct what I did. I really didn't want to mess with the taxes since I know I would show a loss on paper. Any advice? Could I just not mention it? I have not seen an attorney yet.