Sucked into the Twister, looming ch. 7 and a few questions.

[Beechwood]

After divorce and legal bills and very little income, I am preparing to see a lawyer tomorrow for Chapter 7. While I have learned quite a bit reading through posts here already, I have a few more questions...

I run a little store, that is owned by my LLC. I get paid as an employee of the LLC. The store has no equity, and I made shy of $15,000 last year.

Is the business separate from my personal finances as the chapter 7 is concerned?

Personally, I have very little, two old minivans worth about $2000 total, maybe $1000 worth of household stuff, I lost my home already, and the only other thing I need to exempt is my tax refund... it is usually about $3000 and I need that money to live and support my daughter.

Any thoughts on my situation??

thanks,
nervous in Michigan

[ValleYum]

Hi and welcome to the forum!!

You will find lots of kind people who have walked a mile (or ten) in your shoes and much good advice - but you still should check things out with a local BK attorney who can be the biggest help to you since they know what will fly in your district.

I don't know anything about your LLC question so I hope others will stop by and weigh in.

Exemptions: In Michigan, you can use either state or federal bankruptcy exemptions. Since you need to exempt your tax refund and vehicles, the federal exemptions would offer you a wildcard (for unused homestead exemption) in the amount of $10,825 as well as another generic wildcard of $1150 that Michigan's exemptions don't. These federal wildcards are in addition to decent personal property exemptions. You can check out all the federal exemptions here: http://www.legalconsumer.com/bankruptcy/laws/#US

Knowing that your tax refund and vehicles can be safely exempted should make you a little less nervous (I hope). Good luck with the attorney visit tomorrow. I promise you will feel so much better once you get going on your fresh start!

[MSbklawyer]

Is the business separate from my personal finances as the chapter 7 is concerned?

It depends on a few things: Who are the members / shareholders of the LLC? What assets does it own? Who holds it debts? Did you personally guarantee any of those debts? Did the LLC guarantee any of your debts? Does the LLC earn any profit above what it pays you in salary? If so, what is done with that money?

[Beechwood]

Thanks for the input, I will take these questions to the lawyer, I am meeting him Thurs at 3 pm

[Beechwood]

Well, after meeting with lawyer, Not much has been made clear as to what is going to happen.

According to him, because I signed a personal guarantee on the loan for my LLC, the trustee could opt to sell off the store or parts of he deems an asset. Not probable, but still. My parents put up their house as additional collateral on the LLC loan, so that is the only thing I worry about.

Only $1500 even though it is a little complex situation, so i cant complain about the lawyer fee.

[Beechwood]

OK, after sleeping on it for another night, I have come up with another question for the forum.

My LLC has a secured loan from a local bank. I owe $280,000 and I don't believe I can get that for the business and assets. The business has been listed with a real estate company for 6 months at $299,000 and have had no offers.

Has anyone had experience with a situation like this? Do you think the Trustee will overlook the LLC because there is no equity in the business and that it is tied to a secured loan?

This is really bothering me, the personal stuff I can handle. But if the trustee comes in and decides to sell off my inventory or Liquor license the rest of my business will be worth next to nothing.

Any thoughts please!?!?!