What to do with my Etsy shop

[JackSpratt]

I am planning to file for chapter 7. A few months ago I opened a shop on Etsy.com selling handmade jewelry (not fine jewelry; no gold, silver, or high-value precious stones). I only have one item posted for sale so far, and I haven't made a sale yet. Could this complicate my bankruptcy? Might the trustee seize my jewelry materials and supplies? Do I need to shut the shop down until the after I file? After the 341? After the final discharge? After filing, can I make and put up more items to sell, or should I wait?

Thank you!

[justbroke]

Does having a business complicate you bankruptcy? No.

Unless that business is a separate corporate entity (which reads as though it's not), you will need to disclose these assets in your bankruptcy petition. They will be treated just as any other asset. You will need to find an exemption or exemptions to cover those assets. Your "tools" that you use may have a "tools of the trade" exemption as well.

I don't know how much you make with this small business, but the income from that business must also be disclosed in the bankruptcy regardless of amount. If this is a significant small business then you may want to think about filing with an attorney.

Are you planning to file with an attorney or on your own?

[JackSpratt]

As I said, I haven't made a single sale I have small hand tools that were worth maybe $50 total retail when I bought them (none of them now new), and a box of rocks and strings (low-value stones, findings, wire, etc. worth maybe $100 total, if buying new from a discount jewelry supply house). LOL What I am concerned about is whether or not I can make more jewelry and list the pieces in the Etsy shop, as after I have made and listed them, they will have a sale value much higher than the cost of the materials, as they then become hand-made wearable works of art.

[JackSpratt]

I am planning to file per se, if at all possible.

[justbroke]

As I said, I haven't made a single sale

I should have written that I don't know what you will make from this business before you file. If it's a business and not a hobby, I was suggesting some things about how to deal with the inventory and tools since they are both assets. You may be able to claim those as some sort of "tools of the trade" and/or "trade inventory" for purposes of disclosing those assets.

What I am concerned about is whether or not I can make more jewelry and list the pieces in the Etsy shop, as after I have made and listed them, they will have a sale value much higher than the cost of the materials, as they then become hand-made wearable works of art.

This is normal business and bankruptcy does not really prevent you from operating a business. Bottom line, the only thing I think that you need to do, is disclose the assets of this business. Since it's a relatively small value that you place on the tools and inventory, I don't think you'll have a problem using a "tools of the trade" exemption if it is available to you. That way, you don't eat up some of your other exemptions (such as a wildcard).

If this is all reading/sounding like Greek, may I also suggest a guidebook? One of the more popular guidebooks is from the NoLo Press and it's a guide to filing bankruptcy.

If this is sounding like I wrote this before to you, I apologize. I answer so many threads everyday, I forget the individuals and I don't mean to do that.

[JackSpratt]

I really appreciate your time and advice ! I do have the NOLO book, and have studied it thoroughly -- I am just posting here questions that arise after having read it, and which it simply doesn't answer. Any insight shared here is a great help.

I am filing in Louisiana, and there is a tools of the trade exemption, but no wild card.

The question I am really asking is, do I need to close my shop after filing, and keep it closed until after discharge ? Because, though it hasn't made any money yet, it might make some, if I add inventory. Does that make sense ? For example, I read in the NOLO book that an LLC might need to be closed during the bankruptcy period so assets could be examined, etc. My Etsy shop is NOT an LLC or any separate entity.

And, apart from thinking of the assets and tools of the trade, there is the question about making money AFTER filing and before discharge. I read that money earned after filing does not factor into the bankruptcy -- I am wondering whether this rule is any different when the money is made form a shop that existed prior to filing, but had not yet brought in any money before filing.

Thank you !

[justbroke]

You don't need to close your business, especially if that's your source of income. Corporations and partnerships are special because they are a different entity than you personally, though you may own stock in them (or own them entirely such as a single-member LLC). Your business is really you because you are a sole proprietor. There's nothing to shut down. It's not what is causing you to file bankruptcy.

I would not worry about making money after filing either. Even if you made money before filing, a Chapter 7 is a snapshot of your financial life the day you filed. Unless these jewelry pieces end up being worth serious money (by serious I mean tens of thousands of $$$), it is nothing to worry about.

[JackSpratt]

Thank you ! Just to clarify, my primary source of income is tarot readings. I perform these in the street in New Orleans, for donations. This activity does not require a permit in NOLA. I have no registered sole proprietorship or business licence for the Etsy shop (jewelry business).

Another concern I have is that live with a close friend. We are not married and not romantic partners, but we live together and work together. She has been chronically ill for all the time we have lived together (severe asthma, allergies, immune system issues) and has been my financial dependent for several years. She brings very little countable income to our household (even though she contributes in non-financial ways). Do you foresee this situation being an issue ?

[justbroke]

I don't see any issues.

[JackSpratt]

Thank you so much, again !