Considering BK due to business loss...I'm scared & questions

[ScaredINMich]

We had a business failure and have a SBA loan of $120,000 and business credit cards of about $40,000. The SBA loan has a lien on our home and we've already settled some of our business credit cards

I always kept business and personal separate and are current on our mortgage, personal credit cards and loans. Our house has a line of credit (from the business also) and is probably underwater (with the line of credit) about 10%.

We are now at the point we have to see if the SBA will work with us, settle with credit cards or just throw it all in and declare bankrupty.

My husband has a job, but I think we will JUST be able to qualify for Ch. 7. I am not willing to do CH 13 because if I have to pay it back, I will work things out on my own.

My questions:
With the lien on the house, are we pretty much forced to lose it, or can we just do the SBA loan in the BK?
How much cash can we keep? We don't have much, but a few thousand $.
Do the BK courts actually make you sell personal belongings?
How about Investments? We have quite a bit of investments in a SEP (company invested) plan. I've been told that is safe, is it?

I HATE this! I was raised that you never even think about doing this and here we are.

Thanks!

[Babybear]

Just a quick not to say that many of your questions are specific to your states codes and exemptions. So I suggest looking up current laws for homestead exemptions as well as property for your state. Also as I am doing get free consults from attorneys and gather info. Just ask and dont hire one til your ready but they will give you lots of free information.


Others I am sure will have more insight for you as well.

[lillymarlene]

I may be fairly new to this, but I think a lot of 13's are a percentage payback, calculated on your income and what you have left after covering essential expenses. I ended up filing a 13, and it would have been totally impossible to payback the amounts my creditors wanted unless I lived to be 200.

You should probably look for a good attorney, I believe especially if you have/had a business, since that can get complicated. Most of them have free initial consultations. The one I ended up choosing, also let me pick between 13 and 7.

Well good luck, and I'm sure it will turn out O.K.

[LadyInTheRed]

lillmarlene is right about a 13. Go for a 7 if you can. But, you don't have to pay everything back in a 13 unless your disposable income is high enough to do so. A Chap 13 will likely have you paying less than what you can work out on your own.

How much cash can we keep? We don't have much, but a few thousand $.
Do the BK courts actually make you sell personal belongings?

You can keep anything that's exempt in your state. You can see MI exemptions at http://www.thebankruptcysite.org/exe.../michigan.html

If anything gets sold, it's the trustee who sells non-exempt property after taking it from you. But, the trustee probably doesn't want your personal belongings unless you have something valuable. They need to be able to sell it for enough to make it worth the trouble to come get it. But, some trustees are more aggressive than others. Consulting with a few experienced BK attorneys is a good way to find out what the trustee(s) in your district is like.

How about Investments? We have quite a bit of investments in a SEP (company invested) plan. I've been told that is safe, is it?

I don't know anything about SEP. If it's a ERISA qualified plan, it is exempt.