I'm in TX if that helps.
Basically, here's the sit. We own a few businesses - all dba's. We have a $40K personal LOC and several smaller credit cards on Company A (but secured personnally). Company A was in business for about 4 years and had stellar credit -- just didn't make much money. DH worked PT with biz so that he could be home after school with kiddos. I worked FT until kid #3 came along and I was laid off (with lots of other folks)!
In an effort to keep me home with family, we decided to let Company A die a natural death and used LOC to buy another biz -- more FT income. It's seasonal and we under-estimated the length of down-time. We used the remainder of the LOC to pay bills and survive. This biz has less than $6K in physical assets at any given time. It's a low overhead business.
During this time, I also started my own business, another DBA. I used credit issued to Company A to help finance this venture. It hasn't made money yet , but is getting there. This biz is a publishing co and has no physical assets. Monies that come in, pretty much go to the printer, postage and commission for the salesrep.
During downtime DH got desperate and decided to buy a distributorship for a new beverage. We now have about $10K worth of inventory that no-one will buy...and lots of personal debt since he used a credit card to finance it (inventory + territory). STUPID STUPID move!
Add all this up with personal debt that mushroomed over the years and we are stretched to the hilt -- about $150K total in unsecured debt.
We do have 2 car loans that are VERY reasonable -- one a 0% interest and another at 9% (used car). Both are very reliable and will be exempt (TX allows 2 vehicles).
Last issue is home mortgage. After layoff, we refie'd on an ARM and with a "pick your payment". This allows you to pay the minimum amount and defferred intersted is added back to your balance. Given the amount of equity in our home and the belief that new biz would take off, we planned to sell house, use equity to pay down debt and upgrade to a slightly larger, newer home. Real Estate mkt got wacky and our home wouldn't sell. So we now have $3,000 in deferred interest sitting out there.
Okay, here are my ???'s.
1) If we file BK (CHapter 7, we have no real assets and are well below the means test), will we have to officially close the businesses. Seasonal biz is our only source of income. Publishing biz is soooooo close to turning a profit. But it will be awhile before profit turns into substantial income.
2) If it mean't closing the business, could be re-structure these businesses as LLC's and close the dba's? All of the debt is personnally secured. The only debt under a business name is the debt from company that died the natural death.
3) Is house at risk (in TX we are homesteaded and houses are exempted -- we've been in it 10 years so not affected by new laws) because of defferred interest? If we don't have the rest of the debt, we could afford to pay real payments and not this stupid minimum.
4) I know I can't file BK right now because of balance transfers used to just survive. Once I make the decision to go down this path we plan to just stop paying the CC's so that we can actually live on what we make and stop digging the holes. Plan on waiting about 130 days before doing a pre-cert, but will have to stop paying cc's before then.
Thoughts, advice?
Basically, here's the sit. We own a few businesses - all dba's. We have a $40K personal LOC and several smaller credit cards on Company A (but secured personnally). Company A was in business for about 4 years and had stellar credit -- just didn't make much money. DH worked PT with biz so that he could be home after school with kiddos. I worked FT until kid #3 came along and I was laid off (with lots of other folks)!
In an effort to keep me home with family, we decided to let Company A die a natural death and used LOC to buy another biz -- more FT income. It's seasonal and we under-estimated the length of down-time. We used the remainder of the LOC to pay bills and survive. This biz has less than $6K in physical assets at any given time. It's a low overhead business.
During this time, I also started my own business, another DBA. I used credit issued to Company A to help finance this venture. It hasn't made money yet , but is getting there. This biz is a publishing co and has no physical assets. Monies that come in, pretty much go to the printer, postage and commission for the salesrep.
During downtime DH got desperate and decided to buy a distributorship for a new beverage. We now have about $10K worth of inventory that no-one will buy...and lots of personal debt since he used a credit card to finance it (inventory + territory). STUPID STUPID move!
Add all this up with personal debt that mushroomed over the years and we are stretched to the hilt -- about $150K total in unsecured debt.
We do have 2 car loans that are VERY reasonable -- one a 0% interest and another at 9% (used car). Both are very reliable and will be exempt (TX allows 2 vehicles).
Last issue is home mortgage. After layoff, we refie'd on an ARM and with a "pick your payment". This allows you to pay the minimum amount and defferred intersted is added back to your balance. Given the amount of equity in our home and the belief that new biz would take off, we planned to sell house, use equity to pay down debt and upgrade to a slightly larger, newer home. Real Estate mkt got wacky and our home wouldn't sell. So we now have $3,000 in deferred interest sitting out there.
Okay, here are my ???'s.
1) If we file BK (CHapter 7, we have no real assets and are well below the means test), will we have to officially close the businesses. Seasonal biz is our only source of income. Publishing biz is soooooo close to turning a profit. But it will be awhile before profit turns into substantial income.
2) If it mean't closing the business, could be re-structure these businesses as LLC's and close the dba's? All of the debt is personnally secured. The only debt under a business name is the debt from company that died the natural death.
3) Is house at risk (in TX we are homesteaded and houses are exempted -- we've been in it 10 years so not affected by new laws) because of defferred interest? If we don't have the rest of the debt, we could afford to pay real payments and not this stupid minimum.
4) I know I can't file BK right now because of balance transfers used to just survive. Once I make the decision to go down this path we plan to just stop paying the CC's so that we can actually live on what we make and stop digging the holes. Plan on waiting about 130 days before doing a pre-cert, but will have to stop paying cc's before then.
Thoughts, advice?
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