small business and bankruptcy

[stressin]

I was just wondering if anyone has filed for bankruptcy while their small business was still open? I saw a lawyer in March who advised that I should liquidate and close. He felt that I would eventually be bankrupt, but that it was too soon to file. My credit cards were up to date at that time, but that was the last month that I was able to pay them. I am now more than 90 days behind on several cards. I have tried to liquidate my retail shop inventory, but with the economy as slow as it is, I'm not having much success. Most of my debt is unsecured credit cards and I only owe one vendor--and that bill is $13,000. I was hoping to liquidate and pay that vendor before I closed up shop--but it isn't looking too promising.

My question is for anyone who has filed for a chapter 7 bankruptcy with the intention of closing a sole proprietor business that is insolvent? I have read that a trustee can handle the actual liquidation--and at this point, I would welcome that. I am in way over my head in debt--about $67,000 unsecured that I have run up in trying to get my shop open, stocked, etc. I opened about a year and a half ago and then it seems like the whole financial world fell apart--great timing, huh?

I have an appointment with a second lawyer this month and am hoping to retain her and file. Our house is in my husband's name only (he inherited it) and our vehicles are likewise titled in his name. I don't believe we are in a community property state, so the house would be considered separate property and not involved in my bankruptcy. I will be the only one filing as the credit that I had for the business was in my name and/or the business' name, and not in my husband's name. His credit is still very good--no reason to involve him.

I have a few questions for our lawyer about the median We are in Michigan and my husband makes a decent wage--so we may be close to the median income. The problem is, after I close the shop, I won't have ANY income until I find another job, so I don't know how I would be able to complete a 13.

At this point I am mostly just wondering what to expect. I don't have any assets except for the inventory in the shop--which is probably only worth about half of what I owe.

Any thoughts from small business owners who filed for bankruptcy are much appreciated.

[rico0368]

I am also in Michigan and am facing the same scenario. What kind of business do you have? I own an ice cream store that opened also about 1 1/2 years ago and just cannot keep up in this economy. I am still open for business and am wondering if I should try to take a few months to attempt to sell it or just file now so that I don't accumulate any additional debt.
Misery loves company

[ready2puke]

I have a small bus in Ca, and alot of my debt is from trying to keep it open also..I've been in biz for 26 yrs, so thinking of closing it is tearing me up. Its who I am. Silly isnt it? Trying to figure out options like renting out a room but not getting any takers..I hate this ecomony, I feel for you

[soleprop]

stressin, you can file ch7 nonconsumer without worring about being over the median income (the presumption of abuse does not arise in this case). make sure the attorney you're consulting with is aware of this fact.

you just have to prove that your income (schedule I) and your expenses (schedule J) show that you don't have more than $100/month or so in disposable income each month. there are lots of threads here about how to work on your expenses so that they accurately reflect your actual expenses as well as foreseeable realistic expenses.

[BROKENN]

stressin, you can file ch7 nonconsumer without worring about being over the median income (the presumption of abuse does not arise in this case). make sure the attorney you're consulting with is aware of this fact.

you just have to prove that your income (schedule I) and your expenses (schedule J) show that you don't have more than $100/month or so in disposable income each month. there are lots of threads here about how to work on your expenses so that they accurately reflect your actual expenses as well as foreseeable realistic expenses.

I found that Sole Prop is right, nonconsumer (primarily business debts), under Nature of Debts on the Petition is where it is identified.

OP or any, how did all of this pan out?

Did any of you have a 341?

[soleprop]

i had my 341, no foreseeable issues re: my income being over median (though i'm only over by a few bucks). the trustee hasn't filed anything except a 'no asset' notice since 341 though, so i'm still sitting on the fence with my popcorn.

[fltoo]

Most of my inventory was charged on cc's, so I just slashed the price of everything and paid off what I could.

My business was viable for someone as a second income, so I posted it on a website that sells businesses.

Got tons of hits even in this bad economy and got several offers. Sold it cheap just for equipment and assets such as name, phone number, client base. It is still operating under the new owner, but I don't know how well they are doing. It generated enough money to pay the overhead, but never enough to support me.

[BROKENN]

i had my 341, no foreseeable issues re: my income being over median (though i'm only over by a few bucks). the trustee hasn't filed anything except a 'no asset' notice since 341 though, so i'm still sitting on the fence with my popcorn.

Haha... I will sit there too! ****passing soda*****

[BROKENN]

Most of my inventory was charged on cc's, so I just slashed the price of everything and paid off what I could.

My business was viable for someone as a second income, so I posted it on a website that sells businesses.

Got tons of hits even in this bad economy and got several offers. Sold it cheap just for equipment and assets such as name, phone number, client base. It is still operating under the new owner, but I don't know how well they are doing. It generated enough money to pay the overhead, but never enough to support me.

Wow, very cool!
Did you do this before or after your BK? Thanks!

[fltoo]

Sold it in Feb., 08. Won't be filing until Jan., 09. I was careful to document and save receipts on everything I bought with the cash from the business.

Matter of fact, it has been two years since my last cc payment and I was recently thinking I might just let the SOL take its course instead of filing.

Been going over all the ramifications of doing this just this week.

[BROKENN]

Sold it in Feb., 08. Won't be filing until Jan., 09. I was careful to document and save receipts on everything I bought with the cash from the business.

Matter of fact, it has been two years since my last cc payment and I was recently thinking I might just let the SOL take its course instead of filing.

Been going over all the ramifications of doing this just this week.

Wow, smart move!

What is SOL?

In deciding, do you have a *bizillion* dollars in debt? Will you be able to grow in the near future or be 80 when it is all paid off?

[fltoo]

I'm sorry. SOL is statute of limitations. In a few years all this garbage drops off, not that I care about my credit report at this point in my life, age 57. I have a Chase judgment against me, but I am judgment proof.

I have over 100,000 in unsecured and about 25,000 in secured to file against if I decide to do the BK7.

I had to wait two years because of a "fraudulent" transfer and had every intention of filing, but now I am rethinking it. My kids have been against me filing from day one. They keep wanting to "take care of it" but I don't want to go that route yet.

Handling creditor phone calls for the past year has not been a problem at all.
I answer every one of them and tell them that I cannot pay.

There are a few others here that decided not to file yet, so I follow their posts religiously. Lots of good information here.