Planning to file 13, but if we file 7, do we lose the business?

[Lisa68]

Our income has dropped quite a bit, so we are afraid we may no longer qualify for a 13. Our lawyer said if we do a 7, we can likely keep our house, but I haven't asked about the business yet.

Our inventory has also dropped a lot since we have less money to buy product, but we do have probably $30K in inventory. This business is our source of income, and having a variety of inventory is directly tied to how much business we get (ie $5K in inventory for example would mean almost no sales). Also, I am only able to get health insurance through the business (group plan).

Any chance we could keep the business in a 7?

Thank you,
Lisa

[frogger]

Yes, there is a good chance that you can keep the business in a 7. The trustee does not want your business, the trustee wants the $$$ that can be obtained by the liquidation of your business.

We all know in today's economy, it would be tough to sell your business. How much is your inventory worth at fire sale / garage sale prices? That is the bottom line of the value.

Take that value and know that it is the high end of the price that you would be willing to pay to buy your business back. If your inventory is worth 30K, fire sale price at 15k, then perhaps an offer of 5k would be in order.

The trustee wants quick and easy money, and will probably finance it for you for 6-12 months, interest free.

If you don't ask, you don't get.

[Lisa68]

Thank you so much for the response! That makes me feel better.

[frogger]

Thank you so much for the response! That makes me feel better.

You're welcome. One additional word of advice:

Use a bk attorney that is experienced in chapter 7 and corporations.

Your neighborhood bk mill attorney is not where you need to be.

[Lisa68]

Our business is a sole prop. Does that make a difference?

Thank you!