Does selling possessions count towards means test (or anything)?

[KevFinnerty]

(I asked this in another thread but think it got lost amongst the other dialog)

Does receiving $$ from sale of possessions count towards means test or
whatever? Doing so is all I have in order to live on the past month.

Also, what about if friends or relatives loan/give me $$ to help me out?

I have not filed yet but if I do go the bankruptcy route (it is still not definite what I will do) I hope to soon.

[newbie2]

(I asked this in another thread but think it got lost amongst the other dialog)

Does receiving $$ from sale of possessions count towards means test or
whatever? Doing so is all I have in order to live on the past month.

Also, what about if friends or relatives loan/give me $$ to help me out?

I have not filed yet but if I do go the bankruptcy route (it is still not definite what I will do) I hope to soon.

Some of said that the items that they sold (on Craigslist or Ebay for example) have been added in as income. Others have said they haven't. Could be one of the district specific things.

A loan has to be reported as such on your schedules - a debt. A one time gift can be reported as a gift to you, probably wouldn't count as regular income if it is one time.

[Floridagail]

No, selling junk or things to have extra money to get by is not considered income. Income means wages from your job. If you have debt owed to relative or friend it would get counted under your debts. When I filed the trustee ask me how I was getting by on such little money right now, I said Bf helps me out every now and then to get by. I did not include his help with my car payment on my application.

[KevFinnerty]

Thanks for the replies.

[daylate]

Income from sale of stuff to live on

This is the exact question I am currently struggling with. Some attorneys say it is included; others say it is not. And these are attorneys in the same district.

Obviously one is right, the other is wrong.Big question is which is which.

From reading q & a' s doesn't seem to be consistent answers on many issues including this one.

[tcreegan]

grey area

Hi all,

this might be a grey area with no right/wrong answer. I was thinking about taxes, would you report this as income? Maybe a rule of thumb could be, if I report it to the IRS, I should put in my BK paperwork........

Just a thought.....

Tom in Colo

[OhioFiler]

When someone GIVES you money it is considered income. Therefore, when Aunt Sue loans you $500 it should be included as income on your schedules.

When you exchange one asset (i.e. a used car) for another asset (i.e. cash) it is not considered income. You are merely exchanging one asset for another. The exception being if you are self-employed and the asset was a business asset.

[keptdigging]

My attorney has taken the position that I should include any gains as income. Now if you're selling junk for less than you paid for it, you have no gains.

The tax rule is that if you sell for more than you paid the difference is income.

I tried to research this myself (on the web not through real legal resources) and found just one ruling where the ruling read something like "of course it is well settled that only the gains are income". I was surprised this didn't seem to come up more.

In my case I've been selling off a coin collection and am getting more than I paid for items. And the gains will not put me over median.

It really shouldn't count at all if you're not doing it as an ongoing business because selling your junk is no indication of your ability to fund a Chapter 13 (and if you have tons of stuff, creditors already get anything that you can't exempt.) But "should" implies logic and logic seems to have been intentionally thrown out the window by congress in 2005.

[keptdigging]

Oh and if Aunt Sue loans me $500 that is NOT income that's a debt. List it on your schedules... best case write up a note. Unless someone wants to tell me that there's a district where even incurring debts gets treated as income.

[OhioFiler]

Oh and if Aunt Sue loans me $500 that is NOT income that's a debt. List it on your schedules... best case write up a note. Unless someone wants to tell me that there's a district where even incurring debts gets treated as income.

My bad.

If Aunt Sue gives me $500 with no expectation of repayment it is income.

[daylate]

income

Thanks for the input...in researching this whole b-ruptcy thing, there seems to be a lot of inconsistency in what attorneys tell you...it reminds me of those newspaper articles where they give a tax return to 100 cpa's and maybe 1 or 2 get 100....

common sense would seem to me to let you exclude things you sell at a loss or break even...for two reasons, one you lost money and two you can't keep selling things forever to raise cash to live on

[KevFinnerty]

My bad.

If Aunt Sue gives me $500 with no expectation of repayment it is income.

What if the repayment is supposed to come from someone/somewhere else other than me?

I was loaned money by a friend who hopes to be paid back from future profits of a startup company that he had me work for (the company paid me nothing). He says I do not have to pay him back - he expects the company to do that (if they ever make any money). The company is run by a friend of his who he also loaned money too (as well as other people he knows that have been struggling financially).

[tcreegan]

sounds like income...

Hi Kev,

You did work (for the start-up company)
You got $$ (from your friend associated w/ the company)
You don't have to repay the $$ (friend gets it from company, maybe)

Sounds an awful lot like income.......

unless....did you sign a promissary note or some other document for the loan?

Ack....if you did sign something it needs to be listed in your BK filing...

Not helping much I'm afraid....

Tom in Colo

[OhioFiler]

What if the repayment is supposed to come from someone/somewhere else other than me?

I was loaned money by a friend who hopes to be paid back from future profits of a startup company that he had me work for (the company paid me nothing). He says I do not have to pay him back - he expects the company to do that (if they ever make any money). The company is run by a friend of his who he also loaned money too (as well as other people he knows that have been struggling financially).

He is a creditor to you.

[KevFinnerty]

He is a creditor to you.

Yeah, that looks now like the only way to handle this.

Unfortunately I just heard this today in a letter from FreeLegalAid who turned down my BK case partly because of this, although I am trying to talk to the lawyer.....that it is either (a) a loan I have to give back and list him as a creditor, or (b) a gift I don't have to pay back which means my income taxes from last year are wrong since no gift was declared, or (c) it is income/salary which means my income taxes from last year are wrong for that. They won't touch my case until/if the tax issues are resolved and even then have another reason for not doing bk which I won't clog up this thread with. They recommend I consult a private attorney. Which I can't do since I have no money to retain one or I would have already done that.

This is one huge mess. I actually would have been better off handling this all LAST YEAR before my friend stepped in to "rescue" me. Now I am totally screwed on every level as far as I can see and him helping me out just made things worse now. I am in shock and don't know what to do.