Please,...in dire need of help! (long, sorry)

[Stevessvt]

OMG Thank you!! Im calling them now!

[Stevessvt]

Nobody answered, so I left a message. I dont have any medical debt, so I likely wont qualify, but its worth a shot.

Again, thank you so much!

[shabam]

I have read your post twice. You are in a difficult position.

The business aspect is quite complicated. Essentially the Trustee wanted you to buy out your half of the business because it was your asset. Therefore you withdrew your CH 7 petition.

Now you have converted your asset to a corporation. Corporations are separate entities, so it appears that you transferred (converted ) an asset of yours to a separate entity. Even if you were not aware of the consequences, the Trustee will not view it that way as they represent the creditors (and themselves) in the BK.

Your attorney wants nothing to do with this situation so he won't answer questions.

I think you nailed it there. The trustee could view the action as trying to hide assets. By incorporating so close to or during ch 7 this could be seen as fraud.

I just cannot see any way around it without basically selling your half Steve and providing the money to the trustee. So either your biz partner buys his half of the business or the business as a whole is sold and you split the proceeds. Unfortunately since the partnership wasn't established from day one, your biz partner will have to make some tough decisions themselves. Buy your share or sell.

While I am no lawyer, this looks like the most likely scenario.

[Stevessvt]

Excellent. So my screwup may potentially ruin not only my lively hood, but my brothers, and possibly shut down a family business 32 years old.

Good God

[shabam]

I wouldn't take it as you screwed up. People make bad decision when they panic. Have a look at all of the people here who used up their 401K trying to get out of debt and have now lost their retirement.

Bankruptcy is no walk in the park. Every state has different rules. Your business was definitely going to be brought into the equation once you filed. Filing for BK is the equivalent of a financial cavity search. The trustee has the authority to go through all of your finances. Anyone deliberately hiding assets or income could be up for federal charges.

I think you need to sit down with your brother and ask him to work with you on this. Even if it means he loans / gives you the money to seek a lawyer to sort it out. Whether he likes it or not, this will affect the business. Such dramas are part of partnership. It could as easily have been your brother in this mess and it would have affected you in the same manner.

When it comes to being self employed, you cannot just file for bk and think that the business aspect will continue untouched. Whether your share of the business is $100K or $1k, that is an asset. This case is too complicated for you to do it on your own. A lawyer is a must.

[Stevessvt]

My lawyer totally and completely mislead me on this then. He told me there was only a very small chance that my business would be drawn in to this.
He also said the money I had alocated for my property tax's this year, the $3000 I had in the bank, wouldnt matter if the bankruptcy completed. They would be wiped away. I also found out from another lawyer that this isnt at all true, either.

Looks like I just got lucky enough to get an idiot.

I have a call in to the Palm Beach county chapter of the bar association to see if they can refer me to maybe a pro bono lawyer.

[Stevessvt]

I was just told that any money written off is considered income for me. Is this true? I had a car repo'ed, I owed $29,000 and it was sold for $15,000. Do I need to declair another $14000 on my tax's?

[StartingOver08]

I was just told that any money written off is considered income for me. Is this true? I had a car repo'ed, I owed $29,000 and it was sold for $15,000. Do I need to declair another $14000 on my tax's?

Sounds like what they are referring to is a 1099-C, which the creditor is obligated to provide to you for forgiven debt. You do pay taxes on a 1099-C. However, if you file BK, you are insolvent (hence the bankruptcy) and do not pay taxes on the debt discharged. If you are insolvent (even if you did not file BK) then you do not pay taxes. There is a form for that too.

See this link about 1099-C:

http://www.irs.gov/pub/irs-pdf/f1099c.pdf

Here is the information on canceled debt, repossessions, foreclosures and abandonments from the IRS:

http://www.irs.gov/pub/irs-pdf/p4681.pdf

[Stevessvt]

Thanks,...I saw that,....but here is a riddle,.....what if I get them to drop the case, and it doesnt complete?

[StartingOver08]

If your BK is DISMISSED and not discharged, then your creditors have the right to resume collection attempts with you. If they end up canceling your debt for any amount of $600 or more then they are obligated to report the amount of the canceled debt to the IRS on a form 1099-C. That second link from the IRS explains the circumstances that the creditor must follow. That form, IRS publication 4681, is very comprehensive and will explain your tax ramifications.

[Stevessvt]

Update: The closing date has passed for the creditors to make a claim on me. $41,000 in creditors has made a claim on me. This includes a credit card I had with the ex wife, but she was court ordered to pay. But since she went bankrupt also, the buck gets passed to me.
So the trustee wants me to make a propsal on repaying this amount. My business I believe is worth about $30000. But, do I start negotiations now, or do I wait for a final judgement?

[StartingOver08]

Welcome back Stevessvt! So did you stay in your Ch 7 and it became an asset case?

Did you have the business valuation completed? Is the $30k for the entire business or your half?

[Stevessvt]

Thank you for the warm reception! I never had the business evaluated,...I just couldnt come up with the money to do it. I found out that ultimately its up to the trustee to determine its value anyways, so even if I had it done, it might not have changed anything.
30K is for my half. The lawyer for the trustee told me to start making proposals to buy my half back again. So naive me thinks,....hmmm.....what can I honestly come up with a month that wont make it a hardship for me. So I made a proposal of $25k at $200/mo. The lawyer said he wouldnt even entertain the thought of bringing that to the trustee. He then told me he wants to be paid in MONTHS. How am I suppose to come up with that kind of money in mere months?
So I dont know if I should even be trying to negotiate this now, or am I suppose to wait until the final judgement comes down. Or will this effect the final judgement....

[StartingOver08]

When you say final judgement - are you thinking BK discharge? Or is this something else?

It sounds like they are asking you to redeem your part of the business.
Maybe you can check out a place like 722redemption.com to get the funds to redeem your part of the business. They normally redeem vehicles, but it is possible that a source for business redemption could be found.

BTW, if you were to come in with a professional evaluation of the business that showed it was worth substantially less than $30k, I believe the Trustee would work on the valuation.

Remember these Trustees are there to get as much as possible from you for the creditors - neither the Trustee nor the Trustee's attorney are there to help you. Their valuations would naturally be high to benefit the creditor.

[Stevessvt]

I figure thats the scenerio. But I was hoping for a touch of humanity for someone with new child support payments and a serious health problem.