Personal Chapter 7 by former biz owner -- Will I be asked for...

[CS1]

Hello everyone. I've been lurking for a few weeks, and since I haven't seen the answer to my question here, I've decided to ask.

I owned an insurance agency (registered as an LLC) for 9 months last year. It was the worst nine months of my life. My tax returns actually show that I earned a huge NEGATIVE dollar amount last year because the venture was so unsuccessful.

I returned to full-time work this year and received a memo from HR that one of my personal creditors was trying to garnish my wages. (A credit card from 10 fricken years ago... but that's another story). I had planned to file for bankruptcy in a few months, but this tragic development forced me into the lawyer's office to file Chapter 7.

When I filed my Chapter 7, I decided to keep the business expenses for the LLC out of the bankruptcy for professional reasons related to working in the financial industry. I'm not receiving any carryover commissions from the old agency because my old clients are canceling their policies instead of renewing. Every once in a while, I'll get a commission statement in the mail stating that I've earned $100 or so, but I don't get a check because I still owe charge-backs from the canceled policies.

So here's my question:

Will the trustee ask for commission information for my old agency?

Remember: the business isn't included in my Ch.7 and my tax returns indicate that my earnings were in the negative last year. In my opinion, it should be obvious that I was not and am not making any money from the venture that will increase my current income. I also can't sell the book of business because I was a contractor. The book of business doesn't even belong to me.

I don't want to run into any delays or surprises at the 341 and I'm so worried about this.

Thanks for your help, and sorry for the long post.

[HHM]

Are you still the owner of the LLC?

If yes, your ownership interest is an "asset" of yours in BK and must be disclosed. So in that respect, the trustee will know about it. However, as for commissions, if they were received in the last 6 months, you need to include that money in the means test.

You would also be wise to list any LLC creditors upon which you might have a personal gaurantee. If you have a personal gaurantee (you probably do) on any debt relateed to the LLC, then that is a claim you MUST include in your bankruptcy. Just like you cannot pick and choose which credit cards to list in the BK, you cannot leave out business creditors upon which you likely have a personal gaurantee.

[CS1]

Hi HHM. I don't own the LLC anymore. I closed it in November. As far as personal guarantees are concerned, I don't have any at all. Unfortunately, I was unable to get credit on my own, so I had to put my business' credit-related items in the name of the LLC. I am going to call my lawyer in the morning to get some clarification because I don't want any mishaps. Thanks again!

[HHM]

FYI, pretty much any small business credit that is extended has a personal gaurantee.

[music12]

since you said you personally "owe charge-backs" and they are not paying you those $100 amounts because they are applying it to the charge-backs, then i think you have to list those charge-backs as a debt. when they are not giving you those $100, they are essentially collecting on a debt. they won't be able to do that once you file bk.

i understand you don't want to list them because you don't want them to know... but like others are saying, you don't really have a choice. the reason that the bk code doesn't give you a choice is that if people had this choice, they would declare bk just to get rid of specific debts they don't want to pay, but bk is intended to help those who can't pay even if they want to.

oh, you can always pay the debt back after discharge if that's what you want to do.