I SO don't want to do this . . .

[kathy4530050]

I met today with another lawyer and am feeling really uncomfortable with his advice. I wanted to wait to file until next Sept/Oct to let an unusually large payment that came to me in February drop off the lookback period. However, business is looking up for me, and this lawyer thinks there may be a greater risk in waiting too long. He wants me to voluntarily increase my business expenses and file sooner, rather than later. There are lots and lots of ways for me to do this, but it makes me so nervous. Right at the time when I am trying to be as frugal as possible, he is suggesting I increase my spending.

I want to wait, take it slow and careful, and plan to come in under the median. He wants me to start spending, rack up some significant business expenses (which I can pay cash for right now), and plan on filing soon. There is a possibility, just a possibility, that a very large contract may come my way near the end of the year and he wants this all to be wrapped up and out of the way long before then.

Does anyone have any advice for me? There appears to be a real risk no matter which way I turn . . .

Thank you,

Kathy

[JRScott]

I suspect your lawyer is afraid that if you wait to long and business turns around say with that big contract that you would have a harder time qualifying. His suggestion is basically to eat up what capital you have in business expenses such that the business would lose money faster and be in bk sooner.

This really sounds like something you'll have to decide. If your feeling uneasy about his suggestion perhaps its best to hold off a bit and think about it a few weeks and see if your feeling changes.

[OregonMom]

Maybe get another opinion from a different lawyer?

[debtmonster]

That's the cool thing about being in business for yourself. If you want to make less money, all you have to do is spend more money on business expenses. You could easily spend more money on advertising or anything else. A person working W2 does not have this option. They get what they get. This is the cool thing about being self-employed.

[kathy4530050]

Yes, I definitely have an advantage in that I can sort of plan for a particular outcome. However, the whole process is not without risks . . . If you have a steady income, you can at least predict how things will look next month or at the end of the year. However, I can have a really great month and think things are turning around, and then things fizzle. If I had a bit of a financial cushion, I could ride these times out, but I can't really do that any more. Big decision to make. Yuck. i wish someone would give me THE answer.

[SuzieBK]

Feeling your pain, Kathy. It's hard for me to not be going after projects right now because I want to keep my income low for the means test!

[debtmonster]

How can we get them to change the law and do away with the means tests? If people can simply manipulate their incomes to get around it, then why bother to have them if people are simply going to file bankruptcy anyway, whether the banks seem to like it or not.

[kathy4530050]

I'm not sure I agree. I don't think the means test is a bad idea. For me, the problem is just the way my income comes in. For example, I waited months and months for payments due to me and finally 3 overdue payments came in all at once. If they came in when they were due, all spread out, I would have had no problem with the means test. But when a big chunk comes in all at once, AND all of the expenses associated with that income all belong to other months, this creates a lot of problems. Now, I either wait 6 more months or I hurry up and accumulate a heap of expenses. BIG headache . . .

[kathy4530050]

p.s.

Just a little more info so this makes more sense. The things I would spend money on in order to increase my expenses are all things the business really does need, but I just am nervous about spending ANY money right now. We're not talking frivolous expenses, just things I was hoping to postpone a little longer until I knew I was really, truly back on my feet again . . .

[woeisme]

If these are all things that the business really needs, that you will be spending money on eventually anyway, I think your lawyer is right, spend it now and get your debts wiped clean with a CH 7. You can't build a cushion and get a CH 7 at the same time, just not possible, any cushion you build is $ the trustee will want to give the creditors. I know it's hard since you can only pull the CH 7 trigger once every 10 years, but if you are discharging a seriously large amount of debt, that is it's own kind of cushion. good luck!

[kathy4530050]

If these are all things that the business really needs, that you will be spending money on eventually anyway, I think your lawyer is right, spend it now and get your debts wiped clean with a CH 7. You can't build a cushion and get a CH 7 at the same time, just not possible, any cushion you build is $ the trustee will want to give the creditors. I know it's hard since you can only pull the CH 7 trigger once every 10 years, but if you are discharging a seriously large amount of debt, that is it's own kind of cushion. good luck!

Very good point--thank you. I have been so broke for so long that I just don't want to spend money right now. But you're right. I can't build a cushion and file ch 7 simultaneously. And, somehow, in the back of my mind, I was hoping to do just that. But to be debt-free at the end of this IS its own kind of security. I appreciate your perspective. Thanks again!