Filing chapter 7 as Sole Proprietor Insurance Agent

[tasilva]

Good afternoon,

Just wondering if anyone has any BTDT or insight to offer regarding filing as an insurance agent.

Here's the story: over $300k in debt between my business debt (obtained through personal credit) and also my husband's (now failed) business as well as some personal debt.

Have consulted 2 attorneys. 1 referred us to the other because of my insurance agent situation. The other is trying to refer us to another as he thinks that a chapter 11 would suit us best, but this other wants to charge like $20k upfront to do the work. Yikes! Who has $20k laying around? Haven't actually talked to him yet, just what other attorney told us.

The problem is, apparently, if I want to keep my insurance agency. The "service commissions" and "contract value" are the problems. However, the service commissions are exactly that, commission to continue to service the policies, not automatically earned. If I stop servicing the policies, the clients will go elsewhere and the service commissions will stop. Apparently the trustee may want to take this as an asset under Chapter 7.

The contract value is, in essence, like a retirement fund. I do not have access to it until/unless I retire or am fired from the company. If they force me to quit, I will access the money over the course of a year but I will also lose my current income. The contract value is about $80k or so.

Oh, BTW, I am in California. I know laws vary from state to state.

Thanks so much in advance to anyone with any advice. I searched all around these forums and the internet and haven't been able to get a clear answer.

[justbroke]

Yeah, if you file Chapter 7, you may be looking at the Trustee wanting a piece of the action. However, you just don't know if they see value. I've read where Trustee's have taken over the operation of dairy farms! I mean, day-to-day operations!

With the amount of unsecured debt you're probably talking (definitely over $336K), you are Chapter 7 or Chapter 11 Reorganization.

When you're doing a Chapter 7 reorganization though, you essentially close down the business. If you want to keep the business, you go into Chapter 11. Chapter 11s, as you found out, are very expensive to do through an attorney (which is the only way to really do them) and the reporting requirements will cost you money too. Is $80K in value worth that? Probably not.