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What is the trustee going to ask for in sole proprietorship filing?

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    What is the trustee going to ask for in sole proprietorship filing?

    Tax returns and profit lost statements??

    #2
    It's for a ebay business.

    Comment


      #3
      Yes. As you are aware, a sole proprietorship is just your alter ego. That means that the Trustee will seek tax returns and will look at your Schedule C (and other schedules, especially if you're 1099-C). The extent to which the Chapter 7 Panel Trustee looks at your income, tax returns, and P/L statements will be commensurate with what they may learn at the 341 Meeting.

      Expect to be asked many questions about the business at your 341 Meeting. The Trustee will drill into another set of questions specifically for business such as how you did your accounting, where ledgers re kept and maintained, and banking information.

      Suffice it to say that filing when you're a sole proprietor is a little more complex than a general consumer filing. Are you shutting down the business?

      (Edited to add: you said that it's an eBay business. I would hope that you have maintained good records and filed all of your tax returns.)
      Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
      Status: (Auto) Discharged and Closed! 5/10
      Visit My BKForum Blog: justbroke's Blog

      Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.

      Comment


        #4
        I am not shutting down.. I have excellent documents for the past 1.5 years but past that it's sloppy and going back 4+ years it's none existent basically. This was a hobby originally

        Comment


          #5
          The lawyers all make it seem like it's no big deal about the record keeping, but I'm petrified. I wasn't expecting this...

          Comment


            #6
            Originally posted by Gixermeup View Post
            The lawyers all make it seem like it's no big deal about the record keeping, but I'm petrified. I wasn't expecting this...
            I wouldn't worry about the records, since most sole proprietors keep horrible records. (The COVID-related SBA disaster loans disaster -- yes I said disaster twice -- proved that not all businesses keep the same type of financial records.) Since a Sole Proprietorship generally reports on Schedule C, the tax returns will be important.

            If you intend to keep operating the business, that could be problematic if you have inventory. The inventory is your personal property and could be subject to liquidation if there are no exemptions to cover "inventory." Just make sure you find an attorney that understands small-business bankruptcies, and can prepare you for what to expect. I did have a small business, but mine didn't have inventory or parts so it was simple. In fact, the Trustee never asked for any P&L just looked at my returns.
            Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
            Status: (Auto) Discharged and Closed! 5/10
            Visit My BKForum Blog: justbroke's Blog

            Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.

            Comment


              #7
              Well 3 lawyers have all made it seem like it's no big deal, I can keep all my inventory and motorcycle/car. Keeping in mind my inventory doesn't pass the exemption. That's what I've been doing lately and counting and pricing everything. I might have over 14k I don't know really.

              Comment


                #8
                Did you have a sole proprietorship? My 1099s are pretty big. 200k, but I might make 30k. That's what concerns me. I'm not some big business guy. I make 30k at my full time job and have this side hustle. The only thing I have is inventory and a motorcycle. My car I purchased last year because my old car blew the transmission, and it has no equity....

                Comment


                  #9
                  Yes, for one business, I was sole proprietor. I made virtually nothing (less than $20K year).

                  Since you are in NJ, you get to choose between the NJ and the Federal exemption schemes. The Federal scheme provides at least $15,000 in exemptions if you don't own a home ($1,475 plus up to $13,950 of the unused homestead exemption).

                  So, given what you wrote, I would ask the attorney/attorneys that you are interviewing, the affect of "inventory" on the "personal property" exemption. Also, the equity in the motorcycle will need to be examined to be sure it fits the "single vehicle" exemption. Remember, that all your personal property -- furniture, computers, clothing, and even dishes -- must also fit into the personal property exemption.

                  When figuring out the value of your inventory, use "yard sale" prices. Even if you normally sell on eBay, ask yourself what would you sell it during a fire sale or at a yard sale.
                  Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                  Status: (Auto) Discharged and Closed! 5/10
                  Visit My BKForum Blog: justbroke's Blog

                  Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.

                  Comment


                    #10
                    1) is your 20k net or gross?
                    2) do you know if I could use the 1475 on the motorcycle and then the remaining 13950 on another line? Or do they have to go into the same pile?
                    3) I didn't get that deep with lawyers because I just learned this but I was assuming the inventory would fall under tools of the trade and using both wildcards would give me close to 18000 which should cover everything. I'm over inflating everything, like a mouse is $5. A liquidator might pay 1$, not even

                    How did you get not to provide a profit lost statement, we can't even file without one.

                    My personal belongings, not going through anything, and way way way over inflating everything it's 2k. Or do I literally have to go through everything? I only have clothes, shoes etc. I'm not making excuses but I have a learning disability and I live with my parents. I have 3 watches, I just got a smart watch for Christmas so I'm assuming $150? It was $250 new. so $200 in jewelry. I have another appointment on Tuesday with a lawyer. So far I'm liking this other one but it concerns me he might be an volume lawyer. He's the cheapest, advertises on Google and does answer all my correspondence but is very quick to get off the phone like I'm annoying him. He is quick to call me back almost the same day

                    Comment


                      #11
                      1. That was gross income... the business was going slow.
                      2. I can't say how to apply the exemptions. A vehicle has a different exemption category and then you use the wildcard to protect the rest of the equity.
                      3. I don't know if "inventory" is a "tool" based on the plain meaning of the word tool. I do know that "tools of the trade" generally refer to things like a hammer, for a carpenter, or even a work truck for the same carpenter. Since it may be a term of art, you'd really need to consult an attorney on how the word "tool of the trade" is interpreted in your district.
                      4. I didn't provide a P/L because the business was essentially closed. they went by the Schedule C.


                      I would say a new smart watch is worth less than $100 and maybe less. A volume lawyer isn't so bad if they have a large office (with a big support staff). The key is whether they have a lot of experience with sole proprietors filing bankruptcy.
                      Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                      Status: (Auto) Discharged and Closed! 5/10
                      Visit My BKForum Blog: justbroke's Blog

                      Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.

                      Comment


                        #12
                        Give yourself permission to fully research out things esp an attorney. There really is no rush to file for a bankruptcy unless you are using the powerful benefit of the automatic stay... like an eviction, foreclosing, and stopping a trial among many other scenarios.

                        So take your time and dont be hustled by an attorney to act quickly. I know the temptation is there to get 'closure' on the decision making process. But you can choose to get all your questions answered and find a good fit with an attorney.

                        As has been suggested look for ones that have experience matching your case particularities (ie sole prop). You can use RECAP for this and hunt for all cases with sole props, and then look at the docket to see what happened, and then get the right attorney. Sure its legwork but this is far, far better than Google reviews and whatever sweet song they sing to get your retainer dollars.

                        Comment


                          #13
                          I am In a rush, I have two pending lawsuits. The lawyer I met with last week said they can levy my bank accounts, arrest me, take my property...

                          I'm going to file motions on the lawsuits for them to prove the debt is mind and on the one lawsuit it's (17k) so my only option is request a jury.
                          My only intent with this is to "buy time". I thought they would just garnish my wages but my lawyer said otherwise, And I don't make a lot so it's like 10% per NJ garnishment laws. So I have to buy time.

                          This isn't going to come back and haunt me right? I meet with another lawyer on Tuesday and I'll ask him but I would rather have 3 right answers you know?
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                          Comment


                            #14
                            Originally posted by Gixermeup View Post
                            I am In a rush, I have two pending lawsuits. The lawyer I met with last week said they can levy my bank accounts, arrest me, take my property...

                            I'm going to file motions on the lawsuits for them to prove the debt is mind and on the one lawsuit it's (17k) so my only option is request a jury.
                            My only intent with this is to "buy time". I thought they would just garnish my wages but my lawyer said otherwise, And I don't make a lot so it's like 10% per NJ garnishment laws. So I have to buy time.

                            This isn't going to come back and haunt me right? I meet with another lawyer on Tuesday and I'll ask him but I would rather have 3 right answers you know?

                            ​​
                            I was in a very similar predicament like you. I was sued and had 30 days to reply an answer. If i didnt it would be a default judgement. I too needed to 'buy time'. And fought the debt collector. I got myself the law library card and checked out a gazillion books on civil litigation, pre trial procedures, summary judgement, discovery, serving, right to jury trial, etc,etc. The point is i bought a whole 18 months before it was time for trial. So yeah, fighting your collector in court does buy you time.

                            But its a loosing case. The state courts will not entertain anything remotely close to blind justice. So right on the eve of trail, literally right when it was my time to speak, pulled out the papers and WHAM automatic stay baby. If the collector even proceeded with the trial in court id be looking at a small fortune for each violation that came out of their mouth in court. So the judge asked them what they wanted to do..and they folded and dismissed cause of the bk. Big bad bank bye bye.

                            BK is a great option for bailing out of a lawsuit like that. Just make sure you press the nuke button (ie file) well before a judgment is put on you... otherwise your case will get complex and the judgement debt will be like herpes on you.

                            You got served in both cases ? Did you provide an answer and file the 'first paper' fee $$?

                            The attorneys are telling you what will eventually happen ...and they will use fear mongering to get you to rush it. But unless you are at the point of getting an actual judgement against you, it sounds like you have time.

                            Also ive never heard of anyone arrested because of a consumer debt. Maybe they meant judgement debtor examination. But again, this happens way way down the path of a civil consumer collection lawsuit

                            Comment


                              #15
                              Originally posted by Gixermeup View Post
                              I am In a rush, I have two pending lawsuits. The lawyer I met with last week said they can levy my bank accounts, arrest me, take my property...
                              Arrest you? For what? I don't know of anyone that was arrested for not paying a consumer debt. Maybe for not paying a fine from the government, but not for regular debt debt.


                              Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                              Status: (Auto) Discharged and Closed! 5/10
                              Visit My BKForum Blog: justbroke's Blog

                              Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.

                              Comment

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