CA BK7 Lawyer

[holamola]

Hi

I think I have no option but file for BK 7, I'm in Los Angeles/ CA, I don't own a house and have many unpaid CC (half of them business, but lawyers claim while cc is for business, they are still under the owner name), lawsuit (business), business bank loans, business unpaid bills = over $250,000 (COVID messed up our lives forever).

My questions are:

1- Since the business debits are way more the personal, and based my online searches, I found out that if most of the obligations are business debts, the income won’t need to meet the means test qualification?

2- I spoke with two lawyers so far, one that is based in LA with 30+ years experience, cheapest one, possibly will charge $1000-1500, his two secretaries are the RUDEST, MOST MEANEST people I have even encountered, they spoke to me like I was "nothing", yes I understand I was talking to them about BK7, but there is no need to be very mean and treat people like trash, my friends think I'm over reacting and think I should just shut the hell up and go with the lawyer and its only 3 months or so and live with whatever his office rudeness is. This lawyer understand the lawsuit I have and seems to know how to do things, so if I get over his two rude secretaries, I may just be ok? I also spoke to another one found online, the ones you fill out the forms and then they chase you with emails, phones .... until you call them back and then they immediately email you a form to sign, this one spoke with me for " supposedly" free consultation and tried to seem like a nice person, but I could feel his "rush rush" attitude, he charges $2,500 and won't start until I pay them in full, which is understandable. But I know this type of lawyers, while they show some " bit nice" attitude at the start, this attitude changes as soon as they get the $$, so for the people who filed BK on this forum and in CA, do you recommend any good lawyer in south CA? at least someone that does not treat you like a trash, someone that won't charge an arm and leg, I feel $2,500 for the BK 7 is a bit high, but again, I'm no expert.

3- Once you pay the $1500 or $2500 or whatever, do these lawyers ask for more later on, or is this the whole amount until you are discharged and never get in touch with them? I'm sorry but the reason I ask, is that the main reason I'm going with the BK route and 7 specifically is that the $$$ I paid the lawyers to defend my business in the lawsuit! I have used my savings, sold my house, ....

[justbroke]

Let's just get in there and tackle your questions.

1- Since the business debits are way more the personal, and based my online searches, I found out that if most of the obligations are business debts, the income won’t need to meet the means test qualification?

Business debts may or may not be personal debt. For my businesses, I have zero personal guarantees including on an SBA 7a disaster loan. So it depends on whether or not your have personally guaranteed the debt.

It is true that if more than 50% of your debts are not consumer debts, then you get to skip the means test. I was one of those so-called non-consumer Chapter 7 cases. For what it's worth, income tax is also a non-consumer debt.

2- But I know this type of lawyers, while they show some " bit nice" attitude at the start, this attitude changes as soon as they get the $$, so for the people who filed BK on this forum and in CA, do you recommend any good lawyer in south CA? at least someone that does not treat you like a trash, someone that won't charge an arm and leg, I feel $2,500 for the BK 7 is a bit high, but again, I'm no expert.

I can't speak for bankruptcy attorneys in California. In general, especially since you have business assets and should probably shutdown the business as well, I don't think that $2,500 for a Chapter 7 bankruptcy is out of the question. According to available statistics (2011), the average Chapter 7 fee was $1,591 for asset cases and $1,463 for no-asset cases. I would expect that the averages to be a little higher today so I'd guess the median is about $1,750 for an asset case and $1600 for a no-asset case.

Given that you have business debt and a non-consumer, I don't think that is high.

3- Once you pay the $1500 or $2500 or whatever, do these lawyers ask for more later on, or is this the whole amount until you are discharged and never get in touch with them? I'm sorry but the reason I ask, is that the main reason I'm going with the BK route and 7 specifically is that the $$$ I paid the lawyers to defend my business in the lawsuit! I have used my savings, sold my house, ....

It depends. Usually they will determine their fee structure and give you your contract. It will describe what is included in the Chapter 7 fee. It will also describe other per-hour or a-la-carte fees for things like handling different types of motions that come up. It will never include any adversary proceeding (complaint) that may happen. An AP is when either you, the Trustee, the United States Trustee, of a creditor sue you within the bankruptcy.


For you, I'd make sure I had the best representation since you are a non-consumer and have business debt. If your business is a separate legal entity (LLC, Partnership, C Corp, S Corp, or other organizational type which is not a sole-proprietorship), I would look to maybe shut that down cleanly and file bankruptcy for that business. The business will always owe the debt regardless of whether or not you file bankruptcy (or the business files bankruptcy). A business can only be liquidated (Chapter 7) or reorganized (Chapter 11).

[holamola]

Let's just get in there and tackle your questions.

For you, I'd make sure I had the best representation since you are a non-consumer and have business debt. If your business is a separate legal entity (LLC, Partnership, C Corp, S Corp, or other organizational type which is not a sole-proprietorship), I would look to maybe shut that down cleanly and file bankruptcy for that business. The business will always owe the debt regardless of whether or not you file bankruptcy (or the business files bankruptcy). A business can only be liquidated (Chapter 7) or reorganized (Chapter 11).

Thank you for taking the time to answer me in details, the business is LLC and has no assets, I still have the LLC up as I was confused on what to do and was afraid to shut down the LLC before doing the BK, I'm in a process to file 2020tax return for me personally and the LLC, I'm hoping to do so in the next 2 weeks, and then I can shut down the LLC? I will check with lawyer # 1. The business loans (bank loans not SBA) are personally guaranteed and based on the lawyer, all credit cards even for business, have my name on them, so yes they are on my credit report, all of them.
So far, I don't owe any taxes, even 2020 will be filed with loss, zero income.

For the 7 exempt in CA if you don't own a house and have cash in bank, it says $28,225, based on this link https://www.bankruptcysoapbox.com/ho...ep-bankruptcy/ as of 2021? does this mean, I can keep cash in my checking accounts up to this amount, if I have such money? right now, I have around $6,000 in my personal checking and around the same for another LLC that has no assets and is my tool of trade and I want to keep it, I'm confused about how much money I will be allowed to keep, if all what I have is the $6,000 in my personal money and around the same amount for the business (goes up and down, depend on the expenses/sales), other than that, my car still owes around $8,000 and the value is less than what I owe, everything else is nothing really, jewelries like $600 .... tools of trades like camera, lens, some video lights, laptop, cell phone = total of these is are around $2500 max which I think I can claim as tools of trade?

My big concerns are: when I file the BK, will the court freezes my checking accounts, even though they have the above amount? how would pay my rent or my business expenses to get by until discharge? what others are doing in this case?

[shipo]

I suppose my case was a bit unique, well over half of my debt was run up in my name by a former business partner launching a new niche business. After leaving the business when I discovered how far in debt I was, I took a job which paid reasonably well, and well above the median here in New Hampshire, I then started interviewing attorneys in my area, all of whom said I had no option but to file Chapter 13. Oddly enough, I went with the most expensive of the five I interviewed; my total out of pocket before the filing was nearly $5,000.

[justbroke]

I'm hoping to do so in the next 2 weeks, and then I can shut down the LLC? I will check with lawyer # 1. The business loans (bank loans not SBA) are personally guaranteed and based on the lawyer, all credit cards even for business, have my name on them, so yes they are on my credit report, all of them.
So far, I don't owe any taxes, even 2020 will be filed with loss, zero income.

Sounds like you personally guaranteed the debt on the credit cards. My business has a credit card and a charge card and neither are personally guaranteed. That personal guarantee sometimes comes back to haunt you. A personal bankruptcy, however, would take away your personal liability. However, the business is still liable.

For the 7 exempt in CA if you don't own a house and have cash in bank, it says $28,225, based on this link https://www.bankruptcysoapbox.com/ho...ep-bankruptcy/ as of 2021? does this mean, I can keep cash in my checking accounts up to this amount, if I have such money?

Your attorney will need to tell you if you can use the System 2 exemption and apply it for cash.

right now, I have around $6,000 in my personal checking and around the same for another LLC that has no assets and is my tool of trade and I want to keep it, I'm confused about how much money I will be allowed to keep, if all what I have is the $6,000 in my personal money and around the same amount for the business (goes up and down, depend on the expenses/sales), other than that, my car still owes around $8,000 and the value is less than what I owe, everything else is nothing really, jewelries like $600 .... tools of trades like camera, lens, some video lights, laptop, cell phone = total of these is are around $2500 max which I think I can claim as tools of trade?

I would be very careful with taking assets out of the business since it's a separate legal entity. If you are going to shutdown the business and file Chapter 7, the liquidation of the business assets would be part of the deal.

My big concerns are: when I file the BK, will the court freezes my checking accounts, even though they have the above amount? how would pay my rent or my business expenses to get by until discharge? what others are doing in this case?

The courts don't freeze your checking account. But, if you have money in Wells Fargo... I'd move it. They are notorious for freezing an account once they learn of a bankruptcy. Additionally, many recommend that you should not keep demand deposit accounts (DDAs such as checking and savings) at the same bank where you have credit products.

I would advise that you speak with this attorney about shutting down the business. Figure out if you're going to actually liquidate the business by filing Chapter 7. Let me tell you that the business creditors will continue to bother you and they can. They can bother the business itself and keep seeking to recover their losses. That's why I recommend a good consultation on what to do with the business (let it die or file Chapter 7).

[holamola]

justbrokebk
I will check with the lawyer very soon, last time I spoke with him he suggested personal BK 7 to wipe out everything and because of the lawsuit even its for the business, they put my name on it as well and the previous top paid lawyers never even took my name out of it, I wasted my savings, sold my house to protect this business, ended up where I'm right now, the only winners were the lawyers.
I don't have any accounts with Wells Fargo, my checking accounts are with a bank that I never had any loan, credit cards, .... with, I closed the checking accounts with all banks that I had credit cards with last year since I stopped paying them as I don't have any money left, I had the options of either paying them be a homeless or stop paying them and pay my rent and pay for my very basic needs.

My experience with lawyers is really bad, I don't know how to find a good one at a good price. I will have to work on this right away and find the best one that can do a good job.

[justbroke]

A personal bankruptcy would remove your personal liability for any debt. That's even debt that you guaranteed by signing as a guarantor for the business. It does not absolve the business itself form any liability for the debt.

The suggestion for a personal Chapter 7 bankruptcy is the only way to remove your personal liability. Even if the business filed bankruptcy itself, it would not remove your personal guarantee and liability.

[holamola]

So bottom line: file for two BK 7: personal and business, it is good that I visited this website, I had no idea that I may need to file for the business too, I will talk to the lawyer and see what my options and insist that he study my situation very carefully.

[justbroke]

I'm unsure if everyone cleanly shuts down their non-proprietorship businesses cleanly. Depending on the business, the attorney should be able to give you the best way to shut it down.

[bornfree2]

Go to the LA law library and get a membership. Its $140 (i think) that gets refunded once you are done. You can check out 5 books at once. They have a lot of bankruptcy books on there. Look for ones by the National Consumer Law Center. www.lclc.org . They have good ones on bankruptcy and consumer collections. ie https://library.nclc.org/bankr

Reading those will give you a GREAT lay of the land. Im not sure about business debt but for personal it covers a lot of details that is far better than the unorganized mess that the internet gives.

Also start with the Nolo book for a gentler introduction.

And this forum is great too