Asset Protection

[harrisme]

I am hoping someone one can give me advice. I have/had a small Solo Proprietors
The Business has credit card debt of $100,000. I can estimate that after selling all the assets , It will have $50,000 in cash. (

We are a family of six. Two adults and four kids ages 1-8. We are planning on moving to the United Kingdom in the Summer of 2012. My wife is not eligible to file.

How can we spend some/all of the money down. Since the State pays for all the dental/medicine/eyeglasses. That does not seem to be an option.

So here are some thoughts/questions.
As you know that the volts here in the USA are 110 and they are 220V in the UK
So I'm going to need all new appliances. Dishwasher, stove, Fridge, Washer, dryer etc. Can i use some of the $50,000 to but new (low end) appliances. And what about other furniture Beds , Sofas . Bikes etc.
I need a place to live. Can I use some of the money to pre-pay rent to someone in the Uk, and/or to pay an agent to find us an Apartment.
I do have some belongings that I would like to ship to the UK can I use that money to pay for shipping.
I need to find a job/ and a place to live in the UK. Can I use some of that money to take a trip to the UK to look for work and to check out apartments.
Can I place some of the money into a Roth IRA how about into my spouse IRA.

[btbeme]

Since your questions are important to get answered properly, and since they are both unusual and complex, I strongly suggest that you retain an attorney to get the answers.

Generally speaking, it is difficult or impossible to "protect" cash assets of any size, depending on the state exemptions. I am unaware of any BK precedent that will allow to to pre-pay or purchase items in advance. Some of the expeditures you ask about seem reasonable, but a well-informed, very experienced local attorney is likely your best bet.

I'd be interested in hearing what you find out, though.

[dman]

Just gonna throw this out there for the heck of it. Why are you wanting to file? How long are you planning on being in the UK? If it's a permanent move...I'm not sure why you'd want to bother with bankruptcy.

[AngelinaCat]

Welcome to the Forum. But I have to ask, why are you moving to the UK? Business? Family?

I do agree with previous posters that say you need to talk to a very experienced BK attorney, or a very experienced attorney, period.
What you are proposing is going to cross two continents and a lot of different laws. You may have trouble finding several initial free consults.

If you are in a large enough city in Minnesota, and there is a British Consulate there, you may wish to go and talk to those people and see what they advise.

Good luck to you!

[harrisme]

I have no plans on returning to the USA. My spouse and kids though might return to visit family in the summer.
I currently am able to make some income from my Business and even though it failed in most senses. Their is still a small part of it that I would like to try to A) keep or b) start over with only that piece. It is the one part of the business that I would be able to earn income in the USA while living in the UK.

I did think of what would happen if I took the $50,000 and just left and lived off it for a year while trying to get my self resettled in our new home. Then come back in a year and say sorry no money and when they ask where is the $50,000 just tell them I lived off it. But then again something about it does not seem right.

[dman]

Definitely get with a lawyer(s). Too many variables. Are you personally liable for the business debt? Do the business assets actually belong to you or the business? Do you pay yourself a salary just as you would any other employee? Selling off assets that belong to the business but using those funds to purchase personal items could be a no-no, while selling off assets so you can make payroll (even if you're the only employee) might be ok. $50,000 is a lot of money, I'd speak with several lawyers and not just the bankruptcy kind.

[AngelinaCatHub]

As you know that the volts here in the USA are 110 and they are 220V in the UK
So I'm going to need all new appliances. Dishwasher, stove, Fridge, Washer, dryer etc. Can i use some of the $50,000 to but new (low end) appliances. And what about other furniture Beds , Sofas . Bikes etc. You would not ship those items anyway so this is a moot point.
I need a place to live. Can I use some of the money to pre-pay rent to someone in the Uk, and/or to pay an agent to find us an Apartment. No you cannot. This is seen as hiding assets and not appreciated by the Court.
I do have some belongings that I would like to ship to the UK can I use that money to pay for shipping. This depends on how much money. Again, once you file, all property belongs to the Court.
I need to find a job/ and a place to live in the UK. Can I use some of that money to take a trip to the UK to look for work and to check out apartments. Depends on when you file or if you file. If you are not going to file at all, the money is yours if you can get it out of the Country. 10K limit is looked at closely by the USA.
Can I place some of the money into a Roth IRA how about into my spouse IRA. You could, however depending on when you file, this too is hiding assets.

Sorry to be so negative, but 50K is a sizable asset. Being a Sole Proprietor, I believe your debt is just like a personal debt. No breaks like an LLC. 'Hub

P.S. Check on accuracy for all my answers.

[IamOld]

Forgive me for asking this, harrisme - but if you're moving to the UK, why worry about this? If you have a fairly common name, I don't think it would be easy for the creditors to find you there (unless you leave a trail) and even if they did, they'd still have to domesticate any judgments to the UK and/or sue you there...

And once in Europe, you don't have to keep your $$ in the UK...you can have it in Ireland, Switzerland, etc...

Just thinking out loud as to whether in this situation you need to do any BK...

Oh well...in my mind's eye I'm moving to some island :-)

[harrisme]

First I just want to clarify a couple of things. I have no plan on taking $50,000 dollars and A) Spending it all so the creditors get zero and B) Taking the money and running to the UK so the creditors get no money.

My question though was in its simple terms . How can I maximize my deductions to pass the smell test. Their is a general agreement that you can fix a car, buy food, and even perhaps go to the dentist. So If i needed new appliances could I take $5000 and buy new appliaces (fridge,stove,dishwasher, dryer, washer, freezer)

[ValleYum]

You can use Federal exemptions in Minnesota. Within those limits: Household contents are not to exceed $550 in value in any particular item or $11,525 in aggregate value, (this includes household furnishings, household goods, wearing apparel, appliances, books, animals, crops, or musical instruments, that are held primarily for the personal, family, or household use of the debtor or a dependent of the debtor). Remember you need to cover clothing, etc. that you currently have on hand. Appliances can't exceed $550 each unless you use the wild-card to cover them.

If you aren't protecting a homestead or home equity, then you can use up to $10,825 of the unused amount of the homestead exemption as a wild-card (covers cash too) as well as the regular federal wild-card of $1,150.

Google: 2010 Federal bankruptcy exemptions for more details. (The federal exemptions change every 3 years and last were adjusted in 2010)

[harrisme]

Valleyyum.
i think you got my question. So Can i take non-exempt cash and convert it to Exempt assets like household goods. It sounds like I can , aslong as I don't go out and buy a $2000 fur coat.

[ValleYum]

I am NOT an attorney, harrisme, but from how I understand it, if you have an exemption to cover it that you can make the purchase. I would, however, BEG you to run it past a lawyer prior to filing. And I would encourage you to do the best that you can to make sure to keep as much of your assets in liquid cash as you can exempt. My knowledge for Minnesota exists only in the info about Federal exemptions because we used them here in Washington.

Have you determined whether you are or could be a non-consumer filer? That is, if more than 50% of your debt arises from business or non-consumer items likes taxes, etc. This may change things (like what you can exempt, etc.) for you - I have no knowledge about it other than what others have posted on here - but it may be to your advantage to file this way if you can. Again, this is definitely something you should run past a lawyer.

I wish you the best! Oh, and save your receipts for anything you purchase with the $$ in case your trustee requires you to prove where your $$ went.

[DaddyDavid]

Sounds like you are using state welfare services?

For medical and etc.? If that is the case, if you sell those assets and then have $50,000 you have to inform your state. First off, you will be cut off all welfare. After that, there is a chance the state may have a claim for reimbursement if you fail to notify them of your change in finances, or there may even be a claim if you come into money within a certain period of having collected state benefits. As far as leaving the country will debts, if you Google that line of questioning you'll find that except in cases of fraud, you are free to leave the country. But if you are charged with fraud, a crime, that will follow you wherever you end up. Also, child support, spousal support, and federal student loan debt if you have any are sticky subjects to avoid.

[harrisme]

Daddydavid
You bring up some good points. A couple of things though. I dont know what it is like in Colorado but here In Minnisota. They no longer have an asset test for Food Stamps.(or what ever it is called) so you can have as much in the account as you want. and you will still get the food.

As far as medical. you are right their is an asset limit of $20,000 does not apply to Children and Pregnent women where their is no asset test.
However Their is another test . A business test

i cant yet post links but.
20. What if I am self-employed? What is counted as an asset?
If you are self-employed, the first $200,000 of capital and operating assets for your business are not counted.

I would venture to say that this $50,000 we are talking about is capital and would thus not be counted.
as for reporting it. when I applied at the begining of the year it asks Do you have business Asset over $200,000
and I said No. And the answer if I came into $50,000 in cash would still be no.

But you still bring up a very good point. Thank you