Chapter 7- Cash Limits- Freelancers

[BrokenBrklyn]

Ok- So I have some questions. My lawyer basically has a ton of clients and I'm basically disappointed with the service I've gotten with him.

I'm filing probably the first part of next month. My meeting will probably be the 1st part of December.

I live in NY state and I have some questions in regards to cash you can keep.

Does the $2500.00 limit apply to all cash? What would this include?

Would this include the security deposit on my apartment that's held by my management company?

I have a student loan disbursement for about 1400.00 but I won't get that until February (around the time my 60 day period would be over), are they entitled to that?

I also work freelance and will presumably have about 2 months of unpaid invoices out with employers (I operate on a net60) and clients that would come god knows when, would this be consider in the cash limit? Or would they not be able to touch this or only a portion of this? I think this i was confused about the most.


I'm just trying plan the best I can for the road ahead and how much extra work I'm going to have to take to make up for it!



Thanks!!!

[OhioFiler]

Those accounts receivable may be considered an asset. Do you operate as a sole proprietor?

[BrokenBrklyn]

I do operate as a sole proprietor.

Is there any way this falls under the "earned but unpaid wage" rule where they can only take a percentage of it?

This just concerns me because if they end up taking anything that's unpaid, there's no way I'll be able to live for 2-3 months afterwards, because I'll have to wait an additional 60 days to get paid on new invoices, and with only 2500.00, I won't be able to pay all my living expenses during that time while waiting on a whole new crop of jobs.

It's not a matter of being uncomfortable, it's a matter of not being homeless.

[OhioFiler]

I'm assuming you file your Schedule C on a cash basis. If this is the case I would not worry too much as the receivables are not earned until received on that accounting method. Additionally, there is no guarantee they will even pay you. I don't think you have a problem.

[BrokenBrklyn]

I am the WORST with accounting, and my business and personal finances are very muddled together. I don't even have a separate business account....

My accountant does everything now but basically it's really basic and it is on a cash method. I don't claim I have the money, on my taxes, etc until it's in my hands.

[backtoschool]

There are a lot of freelancers in nyc. The trustees are used to it and will see those receivables as "salary" even though you are a sole proprietor. They are not trying to push you out of your apartment and have you go without food. I think you are fine.

The student loan money will be yours. It is not cash on hand, since it will not be disbursed until after your 341

Security deposits are exempt as a separate line item in new york and are not part of your cash exemption.

[tdawg]

I am the WORST with accounting, and my business and personal finances are very muddled together. I don't even have a separate business account....

My accountant does everything now but basically it's really basic and it is on a cash method. I don't claim I have the money, on my taxes, etc until it's in my hands.

I'd say, get a separate business account immediately. It's pretty much mandatory when you have your own business to keep everything straight. Then, just keep receipts in a separate box. Can your accountant take over more of the accounting of your business? Because otherwise, things could get messy (both with BK and with the IRS down the road if you ever get audited).

I'm definitely not the most organized in the world, but from what I've seen people are more successful with their business, filing BK, etc. if the are organized (or can have someone else organize stuff for them). Good luck with your filing! :-)

[BrokenBrklyn]

I totally don't have a separate account. They want 6-12 months of bank statements so I think that I'd have to wait another 6 months to file then?

I do fashion styling and a lot of us don't have separate accounts and a lot of it is all mixed up together.

My lawyer has been advising not putting any money in my bank account at all.

I keep all my receipts taped down by section per month. My lawyer originally wanted to do everything with an affidavit of how much I'm making after business expenses but I insisted on a profit and loss statement because I wasn't sure of the exact figures myself and I'd rather be as legitimate and honest as possible.

What's the likely hood that's going to be messy?

I'm barely operating at this point, I'm in this mess from my job to begin with! Any costs I'm incurring at this point are related to assisting jobs I do for other people.

BacktoSchool- When you say that the trustees look at the unpaid invoices I have yet to receive as "salary" does that mean, they'll likely take it or that they may not because it's not exactly guaranteed and it's not exactly cash-on-hand either?

[backtoschool]

I totally don't have a separate account. They want 6-12 months of bank statements so I think that I'd have to wait another 6 months to file then?

I do fashion styling and a lot of us don't have separate accounts and a lot of it is all mixed up together.

My lawyer has been advising not putting any money in my bank account at all.

I keep all my receipts taped down by section per month. My lawyer originally wanted to do everything with an affidavit of how much I'm making after business expenses but I insisted on a profit and loss statement because I wasn't sure of the exact figures myself and I'd rather be as legitimate and honest as possible.

What's the likely hood that's going to be messy?

I'm barely operating at this point, I'm in this mess from my job to begin with! Any costs I'm incurring at this point are related to assisting jobs I do for other people.

BacktoSchool- When you say that the trustees look at the unpaid invoices I have yet to receive as "salary" does that mean, they'll likely take it or that they may not because it's not exactly guaranteed and it's not exactly cash-on-hand either?

They will treat it as unpaid salary. In new york wages earned but unpaid in the 60 days before filing and any time after filing are 90% exempt. Here is the wording from the new york exemptions webpage:

Wages, earned but unpaid and received 60 days before filing for bankruptcy or any time after: 90%.

[BrokenBrklyn]

Thank you so much, BacktoSchool!

You've really put my mind at ease about so much and I really appreciate it.