sole proprietor bankruptcy

[MomIcantFindmy]

How does the court view a sole proprietor business in chapter 13? I just started this business in September and I am no where near breaking even. Probably wont break even for atleast a year. I have another job with an employer who has cut and cut hours due to the looming resession. They are silently planning layoffs or cutting hours to 5 a week in January. I gave my notice there so I could concentrate on my business. I have one week left. My husband brings home all the money. Do they subtract the monthly business loss till my business gets grounded or do they just expect me to abandon my business and look for another job? (That is my guess)

I know they look back at 6 months of my income and I am seriously worried that is going to hurt us terribly. (although I only made about $1000 a month) One lawyer said we could file a paper that says I am no longer working. Has anyone done that?

[HHM]

You will want to look at Section 1304 of the BK Code.

You are allowed to operate a business in a Chapter 13, but being a sole proprietorship, the trustee may put some restrictions on what you can do, and if you are operating at a loss, may restrict how you can cover those losses.

If you have already decided to quite your job and are operating a business that is losing money...you should be looking for any way to AVOID filing a chapter 13.

[MomIcantFindmy]

If you have already decided to quite your job and are operating a business that is losing money...you should be looking for any way to AVOID filing a chapter 13.

Tell me more about that.......why avoid 13?

My husband makes just under (barely)the income guidelines for chapter 7(and he is supposed to get a raise any min...but we could put that raise into his 401K). It really depends on which form you use.

If I am not working we barely qualify for a chap 7 but we are worried the trustee will use my income back 6 months and then we wont qualify.

Oppinion?

[HHM]

Then...what is the rush to file?

Why not wait until your 6 month income track record comes down, and file a chapter 7.

The problem, based on the information you provided is that your cash flow situation would make it difficult to consistently fund a chapter 13 plan...and therefore, it would ultimately fail, and therefore would be a waste.

[MomIcantFindmy]

The only rush to file is to avoid the creditor calls. Thanks for your honest oppinion. I love this board, I have gotten so much out of it.

[lrprn]

The only rush to file is to avoid the creditor calls.

You should file when it's best to file.

Handling creditor calls is actually quite easy for the few months you would have to wait. Hook an answering machine to your main phone with a message clearly stating who you are. Get caller ID for your phone, then let caller ID screen your calls. Answer only if you see the number of someone you want to talk to - all the others go to the answering machine. Dump the calls off once a day.

If the ringing starts to get to you, here's some ideas. Some folks set the answering machine to pick up after 2-3 rings, then put the phone under a pillow. Others pick up, identify themselves, then just put the phone down on the table and let the creditor talk to the table-top . As long as you identify yourself, the creditor is not allowed to call others to find you (which is the only reason they are allowed to call others by law).

Some folks get a no-contract, buy-by-the-minutes cell phone and give the number to family and friends. Creditors won't know the number

Do a search of the forum - there's multiple threads here about how to beat creditors and collectors at the phone call game