Very new to this

[mac1357]

DH and I have a small business. (dba - sole proprieter). I never dreamed I would be in this situation but here I am. I have several questions. First. Business has not generated an income for a few months and we are running out of our savings. DH does have another job but it does not provide enough income to cover the bills. I passed the means test. I am worried about a couple of large purchases I made a couple of months ago before I ever even thought of a BK. We had to buy a mattress and a laptop. Both were necesarry buys. Our laptop completely crashed and could not be revived. We have to have this for our business. Secondly, the matress we had was 21 years old and wrecking my back. Then I charged some christmas gifts. DH recently became injured and was supposed to have surgery. He cancelled the surgery so he could work if a customer happens to call. I can't continue to pay the bills. I am out of money. With the income from DH's other job, we can barely make upr living expenses. We have 2 kids in college and one in a private school. Even without CC payments I still need $500 a month to survive and the business needs @400.00 a month to keep it going in hopes that things pick up in the next few months. Spring and summer ane our busy months. AmI eligible to file? What happens with the business? I have one CC for the business with a $2,000 balance.

[Michigan1951]

how much did you charge in the last two months? have you started to interview for a lawyer (free consults, usually)? I would stop charging to put at least a 6 month distance from your charges before you actually file bk. there are lots of factors to consider, and each case is different. State, districts, trustees, and your financial situation (income,expenses, among others).

I would make sure you have money for the essentials, and stop paying on the stuff
that you don't want to keep if you decide to file. If the walls are closing in, at least keep the lights and heat on, and EAT.....

There are many forum members here that will jump on to give you solid advice, but you will have to sort it all out for what fits your situation. Welcome, and good luck!!

[mac1357]

Will they come in and take my bed and my laptop? That would be horrible. I am afraid to just stop paying on my CC. I don't want them to come and garnish wages or freeze my bank account. I do not know anything about BK. I am just starting to think that this is inevitable.

[mac1357]

I probably charged $4,000 or more in the last 2 - 3 months. I just kept thinking we will get work... I will use my tax return to pay this off. But now the work is not coming and I am getting scared. In 20 years we have never had such scarse business. My stomache is in knots over this whole thing and i am terrifed of the BK.

[Michigan1951]

no they won't take your bed or laptop. If you want to eat, the credit cards have to stop. And, you can't be using them for at leat 6 months before you file, unless it is for neccesities and not luxury items. Read the STICKIES to get your started on how the process works, do your homework!! There are many people in similar situations to help guide you, but you have to make the plunge. Get all your ducks in a row!!
Yes, wages can be garnished and accounts can be frozen. But there was things you can do to avoid it usually.
Do you own a home? Are you behind on it? Do you want to keep it? Does it have equity? Do you own cars and/or toys? Paid for? Equity in any of them? How much debt are you talking about? List your expenses, income, business information,.......
the list goes on. A lawyer will need all this when you go on a consult. He will guide you but make sure he is an experienced bk lawyer that knows the ropes of your state, district, and trustees. Get referrals if you can.
Clear your head, by learning from this forum with reading and reading and reading posts and threads, okay. You are in the right place to make your decisions and what it all will mean to you in the end....

[Michigan1951]

I probably charged $4,000 or more in the last 2 - 3 months. I just kept thinking we will get work... I will use my tax return to pay this off. But now the work is not coming and I am getting scared. In 20 years we have never had such scarse business. My stomache is in knots over this whole thing and i am terrifed of the BK.

You will have to put a distance between your cc charges before you file, as I have said before. If you file before you receive your tax refund, things might change a bit in regards to how the tax refund money is considered to the trustee. I am hoping soon other readers here will jump on board to clarify what I am saying. You have to stop using the cc cards!

Nobody wants to do a BK unless they enjoy the ride. It is something that you personally have to come to grips with. You can't help it that your businesses are failing and you are against the wall. Your family comes first to feed them, and keep them warm. The stomach knots will not go away if you do nothing. If you decide to file, and do it at the right time, you will be moving forward to a new start. The first step is getting over the fact that you are where you are, and file. You will be relieved you did once it all takes shape. Pride is one thing, starving yourself and family from the chance to live again with less debt and a new beginning is another.

[mac1357]

OK here we go:

CC debt $35,000
Have a mortgage with abour $1,000 equity and I definately want to keep the home. Never late on a house payment.
No toys
Own one van for business, a family van with a lease and the 2 college kids have a car each in DH's name that are paid for. Value of kids cars is @ $3,000 together.
Business has equipment valued at $5,000 and van is worth about $2,000. Business owes $2,000 in CC debt.

I asked one of my cc companies to help by putting me on a repayment program but they said no because i do not qualify due to never missing or being late with a payment. Well, I am going to be late now. I called consumer credit counciling and they said i don't qualify because my income is too low and said file BK.

[mac1357]

Can anyone else answer my questions? I am so stressed over this whole thing. I can't lose my kids cars. They need them for school. I just don't know what to do.

[keepmine]

Frist thing you do is calm down.
Worry about yourself and your husband first. College age kids are on there own for the time being. Very likely, nobody wants 2 cars worth $3k Total.
Use that tax refund for living expenses and your husband's surgery. Let the cc's go. It'll take months if not years before anyone sues you and wins.
As others said, start speaking with a few bk lawyers.

[mac1357]

I am so worried about this stupid bed i just bought for $1,700. We never should have done it. I was sleeping on a board with a 1" foam matress and it was killing my back. I know it is really bad to spend alot of money like that and then not be able to pay for it. I have only made one payment on it. How does that look to go buy a matress and then stop making payments? I feel so awful. I doubt if I can return it now. I had a contract signed with a commercial client and they went belly up and I lost alot of money. Income I was counting on and I will never see it. I feel like such a failure. I am scared of losing everything.

[lookingforward]

My husband is a sole prop also. We filed owing 175K unsecured. We had made a 3800 transfer from cc to pay business debt the month we quit paying cc. We also bought several computers and paid on them for several months (3 or 4?) before filing. We quit paying cc in Sept of 08 and filed in June of 09. We never heard anything about the computers at all.

I hear you about the lack of business. Our bottom line was cut in half from 07 to 08 and we profited a whopping 2K in 09. It is terrifying, I know.

First of all, calm down. Go and get a free consultation. You will feel SO much better hearing it from a lawyer. Nobody wants your kids cars, I really doubt it. And they really don't want your used mattress!

The worst thing that could happen is they repo the mattress. Not likely, but not the end of the world. I had my SUV repod and listed in the paper and I lived through it!

The best thing you can do is go talk to a professional. Consults are usually free, and I can't tell you how much better I felt after mine. I had all of these "what ifs" going through my head and all of them turned out to be nothing to worry about.

Believe me, the anxiety of "what if" is the worst part of this process. Take a deep breath and calm down. I would be so shocked if you lost either the laptop or the mattress, much less the cars. Hang in there! Read around here and you will feel better I promise! I could not have gotten through my Chapter 7 without this board.

[BCA2009]

You will get alot of good information here. I have learned so much reading thru the posts.

You say you passed the means test. That's a good start. The recommedations to wait six months are to put time between your last CC charges and your file date. Were the charges on the same card? Or did you finance the laptop and mattress at the stores where you bought them? Based on what I have read, even though the creditor can challenge the discharge of this debt, for those amounts, it is unlikely that they will if the charges are for less than $1,700 each on different cards. So you may be willing to file prior to waiting 6 months, if your are willing to risk giving up those items.

I would NOT use the tax return to pay on any credit cards. This would be a preferntial payment and the Trustee would just take the money back.

Use the money to pay for living expenses. I'm sure you can spend 4K on normal expenses pretty quick. You can use the money to pay for your attorney also.

By the time you wait on your tax refund and talk with several attorneys you'll be getting close to six months out from those charges anyway.

I would move forward with the attitude that you are going to file as soon as possible. It will take more time than you think to pick out an attorney and get all of you paperwork together. And you can always decide to wait a little longer if necessary.

Good luck!

[SleepWellNow]

As others have said, once you have a consultation with an attorney, you will feel better. He/she will explain how a BK works and how you can exempt certain assets (ie. your kids cars). You will be advised how best to spend your tax return (and I'm quite certain it won't be to pay off the credit card). Most of all, you will leave knowing how your business will or won't be affected.

We also had to file a BK due to a business downturn. We exempted business equipment in the hopes the business will some day pick up again. Just remember, there is life after a BK.

[good2free]

If you are planning on BK for the 35K unsecured credit only, It should be a piece of cake. Lots of people who filed racked up cc charges over 100K+ and got discharge no problem.

I hear you and I suggest not to worry too much on this issue.

All you need to do is talk to a layer and start the process. You are looking at about 2K expense depending up on the area you are in. Use your tax refund for this good purpose.

[catleg]

Relax we're here to help.

What state do you live in?

How did you pay for the mattress and computer? General purpose credit card or store financing?

What kind of business is this? Do you carry inventory or is it personal services?

How bad are your credit card interest rates? Most likely it's time to quit paying them.

This is simply a business decision, don't take it too personal.