homestead exemption and running business after filling

[niki123]

My husband and I own 4-plex in California. We are thinking of filling Chapter 7. Looks like they might be some money in the house and we are ok they we will loose it. Question is will we be able to get state homestead exemption if the propery is a 4 plex?We do live in one unit from the beginning (10 years).
Secondly, I have a company wich is a startup. There is some money going through it's bank account, but I do not take salary from it. Can this business operate while we file?
Are there going to be any restrictions?

[DeadManCrawling]

Filing while owning a business is always more complicated. We did so, with no bad outcome. However, we run a business that is based entirely on personal skills that cannot be transferred, and had no storefront or inventory to worry about. Additionally, the equipment to run our business is worth only a few hundred bucks. In the hands of a general member of the public, it is nothing. We skated through bk with no problem.

There may be others who can provide better answers, but they will need more intricate descriptions of all you mentioned. I doubt homestead exemptions can be applied to multi-family housing, but cannot say with certainty. The value of your business CAN be taken by the trustee, but they usually won't mess with anything that they cannot turn into cash easily. There are ways to plan for this and protect yourself.

Share more about your situation. How MUCH is the business bringing in per month? Are you taking no profit or salary because you HAVE to, or because you do not want it to show on a bk schedule? Is the business incorporated? Does its' potential income push you over the median for Ch 7?

[niki123]

My business is also based on personal skills, and I do not think they can sell this business if I’m not there. I do have some desks
computers and a truck. All together worth maybe 8-10 k. business is a corporation. From February this year till now I had around 20k run through business account. I do not take money from this business because i can't afford it. Between the expenses and material cost there is no much money left. I did talked to couple of attorneys they never mentioned any median? What is that?
They also do not seem to see the problem with 4-plex but i wanted to double check and see if anyone was in similar situation.
I will appreciate any advice. Thank you.

[niki123]

Also, i would like to know if the trustee let you operate the business during the process? If yes, was there any problems or regulations? Could you have money coming to business account and how this money was treated?

[DeadManCrawling]

In our case, we continued to operate as normal. What the trustee will be interested in is:

1. Can you cover the value of the business assets under your state's exemption schedule? If not, you may be asked to BUY BACK your own equipment from the BK estate that forms once you file. This "estate" contains all of your personal and business property. When valuing your equipment and truck, you should lowball the numbers as much as possible. This is fine, since the trustee would not be able to get anywhere near fair market value in most cases.

2. If the business is not easily transferable, the trustee will be interested in cash flow. In our case, we asked clients to pay up in advance and let the business account float below a hundred dollars for a few months during the active part of the bk. The trustee, in our case anyway, realized there was no value in trying to confiscate a couple old computers and hard drives, which were the nexus of our business. In our hands, the computer gear could make a monthly income of as much as 20k. In anyone else's hands, they would be junk shop items.

3. The exemption that covers personal and business equipment. You may have a tools of the trade exemption as well, which can help.

I cannot say anything about the homestead status, I don't know much in that area.

I agonized a long time over the possibility of losing our business, but in the end it was painless. You should only take this as general suggestions, though, always talk to a BK attorney who has handled personal/business cases in the past. It is worth it, even if you spend a little more upfront.