Trying to decide to file or not...

[drew489]

Hi all,

Here's the basic background, I owned a business, economy went backwards, I tried to use all my credit cards and savings to keep it afloat (likely story, I'm sure) and it didn't work.

I have approximately $60k in credit card debt that has gone into collections.

I have a $55k line of credit I PG'd with my 2 business partners (1 of them already went through a Chapter 7). They are threatening to attach to my home.

I have a $39k collection account from our printers that the 3 of us PG'd. They're threatening a law suit.

I have a $550k house that is now worth $380k and we are 8 months behind on the mortgage (currently being modified with BoA and Cwide).

I have a $10,500 property tax lien the town put on my house.

My car got repossessed and they're threatening suit for $14k.

My income is SEVERELY reduced, by about 80%. We can survive and get by if the loan gets modified and if I don't have to pay back any of the other loans.

I have about $15k in TOTAL savings but no other assets.

I don't want to file, if possible, because it will cost me my job nearly instantly but I cannot take this stress nor do I want to ruin the rest of my life trying to fight this off.

I own a small business now that generates all my income but, as aforementioned, it's only bringing in about 20% of my previous income (I was over $300k a year). The business has maybe $15k - $20k in assets.

If I file BK, can they take my business assets and put me out of business? It's an LLC.

What if I never file...what's the worst that can happen to all that debt?

Are the $15k in assets I have enough for them to seize? It's literally EVERYTHING I have and if I used it to pay back a smidge of the debt...it wouldn't help anything but it would hurt me even worse just making the problem worse. Now, if I had $200k in assets and it would eliminate all my debt...I would do it...but only having that small amount doesn't seem like it does any good.

Any advice? Thanks so much, been a very tough 18 months.

[music12]

why would you lose your job if you file? it's your own business that generates your income, so who would fire you? and if you have a job working for someone else, it would be illegal to fire you for filing. plus, your employer would find out about it only if he is also a creditor. that is, unless you end up with chapter 13 and have your wages garnished. you might end up with chapter 13 because if i understand your post correctly, you are now making 20% of 300k, which is 60k, which could very well be above median, depending on your state.

in most states 15k is over the exemption so you are likely to lose at least some of it. maybe you should wait until the 15k gets depleted and then file?

i don't know about how the bk will affect your business.

my best advice is to go for a free consultation with a bk attorney or two in your area and see what they say.

[drew489]

job loss...

why would you lose your job if you file? it's your own business that generates your income, so who would fire you?.

I need a certain type of license to do my job and a bk causes me to lose that license. Therefore, I would have to close my doors.

[last2cents]

Drew - I'm in "roughly" a similar situation.

Without going into a lot of detail....my business is insolvent, and has priority claims (IRS) that will probably discourage the trustee from looking at it as an asset. I sure as hell don't, and at this point, if the trustee wants it - he can have it (and deal with my cranky customers as part of the deal).

I think that overall, the whole concept of keeping your business operational or safe from the court is based on whether or not it can be sold, or its assets sold to generate cash that is directly payable to you. I'm a C Corp - so distributions to shareholders after liquidation I believe works a bit different than an LLC.

In my case, there would be nothing left over after the assets would be liquidated - therefore, no distribution to me (the shareholder). My lawyer feels that it will be ignored by the court.

At least that's what I'm hoping will happen. If I can get out from under all this extraneous expense, I might actually be able to revitalize the business and get a little bit ahead.

The 15K in assets, may or may not be covered by exemptions.....that's pretty much state specific. What state are you in?

[music12]

then i guess you have a choice:

1. not file, hope your business picks up, and pay your debts.
2. find a new career and then file.
3. find a new career, sell your business and use the proceeds to pay your debts.

there are probably other options; there are just the ones that come to mind right away. scary choice...

[last2cents]

I need a certain type of license to do my job and a bk causes me to lose that license. Therefore, I would have to close my doors.

I don't want you to give any identifiable details away, but I'm horribly curious...what type of business? CPA?

[drew489]

State of...

What state are you in?

dismay.

j/k, New Hampshire.

[drew489]

Job field

I don't want you to give any identifiable details away, but I'm horribly curious...what type of business? CPA?

Financial field.

[drew489]

then i guess you have a choice:

1. not file, hope your business picks up, and pay your debts.
2. find a new career and then file.
3. find a new career, sell your business and use the proceeds to pay your debts.

there are probably other options; there are just the ones that come to mind right away. scary choice...

1. This could very well happen. Which is why I want to hold out. I would LOVE to be able to pay these people off. That's the irony of these situations. The creditors make you feel like a jerk but do they really think I'd rather have no money than to actually HAVE the money and the means to pay them back?

2. Another possibility that has crossed my mind. I just don't know how it would be to try to find a good paying job with a BK, bad credit and possibly a foreclosure.

3. It's a possibility to take the biz out of my name, wait a year or so and file I guess.

[last2cents]

LOL - I'm usually in a state of Dismay, but more lately it's been the state of Confusion.

I'd really like to go back to the state of Corruption. It was much more fun there.

This is a list of NH exemptions:

http://www.bankruptcyinformation.com/NH_exemp.htm

I got a chuckle out of the fact that you can exempt a church pew. (Hmm, can't do that in Arizona..I wonder why??) And don't forget the yoke of oxen....

(I am continously amazed at how much stuff from the 19th century is still included in BK exemption lists)

I think you might be out of luck on the cash...and the advice to use it before filing I believe is sound.

I also believe that you need a good attorney, as it sounds as if your case is as complex as mine is going to be.

[drew489]

LOL - I'm usually in a state of Dismay, but more lately it's been the state of Confusion.

I'd really like to go back to the state of Corruption. It was much more fun there.

This is a list of NH exemptions:

http://www.bankruptcyinformation.com/NH_exemp.htm

I got a chuckle out of the fact that you can exempt a church pew. (Hmm, can't do that in Arizona..I wonder why??) And don't forget the yoke of oxen....

(I am continously amazed at how much stuff from the 19th century is still included in BK exemption lists)

I think you might be out of luck on the cash...and the advice to use it before filing I believe is sound.

I also believe that you need a good attorney, as it sounds as if your case is as complex as mine is going to be.

Thank you for the list. It would be quite amusing to dump my money into oxen, slaughtered pig, horse and fowl. Then just sell it back to the farmer after for cash.

[music12]

why take the business out of your name? if it's so that when you file you won't have to give it up for the benefit of creditors, then you are not supposed to do that. you will have a lot of explaining to do in your filing for why you transferred it out of your name. these kinds of things are called "fraudulent" so be careful. if you do end up transferring it but have a good reason other than to protect it from creditors (such as to have it keep going after you file because of the license issue), still would be a good idea to wait for at least a year.

[last2cents]

Drew - you're welcome....and please don't think that I meant to make light of your situation....(in retrospect, that last post might have been taken that way - and I truly didn't mean that.)

I've found that if you can't find a way to laugh..(and for some strange reason the idea of exempting oxen simply cracked me up. Hmm - now where can I find some oxen???) then you've lost the way to live...and while my sense of humor may seem odd to some, I need to find something humorous in all of this - otherwise, the "men in the clean white coats will be coming to take me away, ha ha, ho ho, he he".

[drew489]

Drew - you're welcome....and please don't think that I meant to make light of your situation....(in retrospect, that last post might have been taken that way - and I truly didn't mean that.)

I've found that if you can't find a way to laugh..(and for some strange reason the idea of exempting oxen simply cracked me up. Hmm - now where can I find some oxen???) then you've lost the way to live...and while my sense of humor may seem odd to some, I need to find something humorous in all of this - otherwise, the "men in the clean white coats will be coming to take me away, ha ha, ho ho, he he".

No, not at all, I take no offense to it. I too need to laugh or I will go nuts. Hero to zero pretty quick. Amazing actually, it's made me humble and learn a great deal about business, who to trust (no one) and how to handle one's finances.

My new business is doing well but I'm handling money the polar opposite...I pay myself nothing and keep all the money in the biz. Previous biz I paid myself everything and left nothing in the biz...stupid. Rookie mistake.

But anyway, I took no offense.

[last2cents]

I pay myself nothing and keep all the money in the biz. Previous biz I paid myself everything and left nothing in the biz...stupid. Rookie mistake.

No - not really a mistake.

It's more an issue of balance...knowing when to leave money IN the business, and knowing when to take it OUT.

A very hard lesson I learned during my permenant sentance to the the self employed jail cell (cynical, aren't I?) ....determining exactly what your motivation is....do you want to create something larger than yourself (i.e. a successful business, with employees, and customers, and a good reputation, a good product, and payroll taxes, income taxes, workman's comp, employee health coverage, etc), or are you looking to create a living and wealth for YOURSELF.

Sometimes, if you're really lucky - the two go hand in hand. Most times, they become severe disconnects.

That, IMHO, is the reason most small business fail. Just my two cents (yuk yuk).

However, if you can get past your own initial motiviation (wealth creation vs the need to build something)....and then start to look at your business in a more abstract way (not saying with less passion - but maybe with less emotion)...I do believe that any individual is more apt to make it a success.

Just my "2 cents" - YMMV

(don't mind me - I'm just rambling this evening.....it still hurts to see what I've done to my company.)