Question about business account and new job offer

[Dilly]

My mother in law has a business bank account (LLC) and my husband and I are listed as authorized signers. She sold her house and all her money is in this account. We can prove it's not our money, but we do write checks on it on her behalf each month. She is in a nursing home, and we pay her bills. None of her money has been used ever to pay anything of ours. We basically write three checks each month, one to the nursing home, one to her insurance (every few months on this one) and one to get her hair done at the nursing home. She will also write her own checks payable to herself for cash. Is this something we need to disclose in bankruptcy?

2nd Question. My husband has been unemployed for the last two months. We have paid our bankruptcy fee in full but it has not been filed with the court. He was just offered a job this week. Is this something he should wait on until after the bankruptcy is final? Will taking this job cause us to not qualify for the CH7? What happens if he were to take it, but not disclose this info? Is there a database or list of new hires somewhere that the court could access? Not saying this is what we are doing, just wondering if there was a way they would find out.

[SMinGA2]

Is passing on the job a wise thing to consider? YOu'll have to consider the likelihood for other job prospects to answer that one. Something we can't know.

If he takes it, and doesn't disclose it, you would risk perjury and getting your case thrown out/debts ruled non-dischargeable. Ever. When you sign your petition, you're stating its accurate. The trustee will again ask if its accurate. Don't risk it. Whether this will impact your filing, would depend on the details. Estimate his net income, and review your bills/expenses. The trustee could require your tax returns. For 2012, I mean. You would not know if this is going to happen until well after you have filed - and they would certainly show a discrepancy with your petition. There may be other ways for the trustee to 'find out' but this is one that I know of.

I personally don't think the mother's account will be an issue. Being a signer and writing checks on her behalf does not make it your money. Still discuss with your attorney, of course.

[Dilly]

Do you mean they can request to see next years tax return after the bankruptcy has been discharged? That wouldn't give them a date of employment, just a total of all income in the year.

[btbeme]

We can prove it's not our money, but we do write checks on it on her behalf each month. She is in a nursing home, and we pay her bills. None of her money has been used ever to pay anything of ours. We basically write three checks each month, one to the nursing home, one to her insurance (every few months on this one) and one to get her hair done at the nursing home. She will also write her own checks payable to herself for cash. Is this something we need to disclose in bankruptcy?

You will need to show all of the "footprints" in and out of this account, likely for the last year, for a Trustee to understand what is happening. And then, he might still not be kind about it.

Since you have this issue, and this issue could become a devastatingly expensive one for you and your mother in law, I am hoping that you have consulted with and hired an attorney.

[Dilly]

I guess my question is do I have to tell my attorney about the account, since it isn't our money and the account doesn't belong to us. Is there a way for the trustee to find out any accounts that we are listed as "authorized"? It's a new account, just opened in April after her house was sold and she was moved into a nursing home.

I do realize this is more of an ethical/moral/legal question so if someone would like to answer me privately, that is fine.

[despritfreya]

I see NO issues with this account:

1. It is in the name of an LLC - I assume you are not a member of the LLC. If you are not a member then the LLC is not listed on Schedule B as it is not an asset of your case. If you are a member then there is a problem. If you are a manager of the LLC (what does the operating agreement or formation papers say) you must disclose it on question 18 of the Statement of Financial Affairs but, so long as you have no ownership interest in the LLC I see no problem.

2. I will assume that when you indicate you are an authorized signer on the LLC account you ARE NOT also on the title to the account. You being a signer is nothing more than a tool to help an ailing MIL.

3. The funds deposited in the account came from the sale of property belong to and titled to your MIL. Clearly traceable and clearly not an asset of your bk. The funds are used solely for her benefit.

Your MIL is in a nursing home and probably needs help taking care of her finances. You do this for her. This happens all the time and, I have never seen this to be a problem.

As to not disclosing a new job. . . now that is a problem. Look at question 17 on Schedule I.

And, as it relates to both issues, yes. . . tell your attny. I always want my client to tell me so that I can go over the above with them. That way there are no surprises and if there becomes an issue with the Trustee I will know what to say without being caught off guard.

Des.

[Dilly]

Thank you Des. Neither of us are a member, not on the title, nor manager of the LLC. We are on the account as an authorized signer for writing checks or using a debit card.

My husband is pretty set on not telling the attorney about the account. This is why I want to know if there is any way searchable for a trustee to find the account if he doesn't tell them.

Also want to add that my husband is filing and I am not. Our house (his name only) is going into foreclosure and there is about $30,000 in medical/CC debt, none of it is in my name.

Another question is about MY assets (remember, I am not filing). I have my own LLC (has nothing to do with MIL's and is totally separate from my MIL's) and it owns our cars. We transferred them to the LLC when I formed it 18 months ago, long before we knew he would have to file for bankruptcy. My husband is not listed on the LLC in any way, does this need to be disclosed?

[AngelinaCat]

It is my opinion that husband, who is filing, needs to disclose this account to the attorney. Let the attorney advise as to whether it needs to be further disclosed.

I say that because in our case, we had an Enemy that made it his business to know everything about us he could and suspected, and this Enemy made anonymous letters to our trustee concerning anything he thought we might not have disclosed. And there were a couple of problems that we did not know to disclose, thanks to our inept attorney.

ETA: You really don't want anything hanging out there that could possibly rise up and bite you in the seat. You and Hubby know about this account.

[despritfreya]

And I was about to knock off for the evening. . .

My husband is pretty set on not telling the attorney about the account.

I guess that is his decision but have him read these posts. He should disclose everything to the attny before filing. That is the only way his attny can do a proper job in protecting your husband’s right to get a discharge.

This is why I want to know if there is any way searchable for a trustee to find the account if he doesn't tell them.

Not sure if there is, but if there is a way, the Trustees know how to do it.

Also want to add that my husband is filing and I am not. . . I have my own LLC. . . and it owns our cars. We transferred them to the LLC when I formed it 18 months ago. . . does this need to be disclosed?

1. When you say “we” transferred the cars, do you mean the cars were in both of your names and you moved them to the LLC name? If yes, you better tell this to the attny as such is a conveyance the Trustee can and will set aside. Very bad.

2. I am in a community property state. If one spouse has an LLC the other spouse automatically has an interest in it and the asset is listed. I do not know how non-community property states work. Same issue with the vehicles. I would have my client but both vehicles back into their names before filing, they would be properly listed and any allowed exemption would be taken. You and your husband really need to talk to his attny about the transfer. Transfers within 2 years of filing MUST be disclosed on question 10 of the Statement of Financial Affairs.

Well, there you have it. Off to bed. Will pick this back up in the a.m. if necessary.

Des.

[Dilly]

We are not in a community property state. My LLC lists no members, no owners. It is a New Mexico LLC. The cars were in his name and we transferred them to the LLC 18 months ago.

[Drazil65]

Hi, like Des pointed out above, transfers within the last 2 years of filing MUST be disclosed. You probably want to take note of the suggestion to transfer the cars back to your husbands name and out of the LLC before filing. Trustees are funny about things like that! Good Luck...

[despritfreya]

. . .You probably want to take note of the suggestion to transfer the cars back to your husbands name and out of the LLC before filing.

While this is most likely what the attny will recommend, before you do anything, talk to him/her as it relates to all issues.

Des.

[Dilly]

We can't put them back in his name. Long story short, my daughter was a witness to a crime when she was 7 yrs old. She named names and people got arrested. Her mother died of an overdose and the man that was with her was arrested. That is when she came to live with me, and I legally adopted her when she was 9. She will be 17 next month.

We found out two years ago this one person has been asking around about her, and had a friend that worked for the utilities and was able to find our home address. At that point I took my daughters and moved 600 miles away. Nothing is in our name for this reason. No one knows our address, we don't even get mail delivery at home. My husband just recently had to give up his job to move with us. Another issue is that when my daughter turns 18 next year she will inherit her mothers life insurance money. Since the day her mother died we have had contact with her extended family twice, that's it. They didn't really know my daughter before her mother died because her mother had been estranged from most of her family, with the exception of a sister. This family knows about the money and all of a sudden are trying to get back in contact with us.

It's very important that our address is kept secret, and that no one can locate us through DMV or utility records. We cannot put the cars back in his name. If we tell the lawyer about the cars is it possible they can stay in the name of the LLC? I understand it's a crime to lie, but at this point I would back out of the bankruptcy, or chance being found out and dismissed, to keep my daughter safe.

[despritfreya]

I do not have answers for you. . . only a suggestion due to the situation.

List the vehicles on Schedule B and indicate that you are the "equitable" owners. Take whatever exemption you are allowed. Then describe the transfer on question 10 of the SOFA. The moment the case is filed, contact the Trustee and give him/her all of the details. This may or may not work. If it does not work and the Trustee goes after the vehicles, convert to a 13 and pay the value of the vehicles to the creditors if the 13 Trustee also questions this.

Alternatively, if we are not talking about a lot of $$ and if the 7 Trustee makes a stink over it, settle the dispute and buy back the vehicles from the bk estate. Since there is a "real controversy" the Trustee can cloak the purchase as a compromise settlement thus eliminating any possibility that someone will outbid you for the vehicles. Trustees typically will take payments over a short period of time, 6 months to 1 year.

Again, the most important thing is to TELL THE ATTNY.

Des.

[SMinGA2]

Yes.

A potential tax refund for the year 2012 would be a potential asset in the bankruptcy case. Even though its paid in early 2013, its earned in 2012. Say you file September 1st - then 2/3 of the year is completed at time of filing, so 2/3 of your income tax refund could be considered an asset in bankruptcy. Even though the 1040 would not show where income came from, it would show higher income than included on the petition if your husband starts a new job now. And what if they don't ask for a copy of the return form - but a tax transcript? I believe that WOULD show all sources of taxable income.

If he'd already filed, and then was offered a job, it probably would not matter for the chapter 7 filing. But starting a new job now, not disclosing the income and filing the petition as if he were still unemployed: BAD idea. Fraud is fraud, and I'm fairly certain the trustee has great leniency to go back and rectify the situation should it be learned a filer committed fraud on his/her petition, even if its not discovered early.

Do you mean they can request to see next years tax return after the bankruptcy has been discharged? That wouldn't give them a date of employment, just a total of all income in the year.