Questions Please

[wrinkleigh]

I am new. Here is my situation. I do have a meeting with a lawyer tomorrow, I am just so nervous.

DH quit 55,00/year job to start his own business. It is set up as an S corp. If is totally financed on credit cards. The debt that the business has in its name is about 30000.00. But we also used our personal ccards to finance an additional 25000.00. The business is failing miserably. DH's income was practically gone. We were trying so hard to pay everyone, that we wound up charging things like gas, groceries, and other necessary expenses, just so we could keep up with minimum payments every month.

We actually lucked up, and a job opportunity came along for DH. Not making nearly what he did previously, but certainly much more than the business provided.

He took the job, and we have someone running the business. It is not making money, and we cant even pay our rent (for the business) this month. I really want to close it and get out.

I sooo want to do a CH 7 and try to start over an put our lives back together. This month, DH didnt have any income because he had to work 2 weeks before he got a paycheck, and the store had to pay its employee. SO we are really short. I had to stop making payments on the CC's, so I could make my house and car payments.

I am so worried at this point. What should I do???? I am tired of crying, I cant sleep. I am just scared to death. I have no real assets, both cars are financed. I live in a manufactured home, which I still owe 20 years on. I dont have anything, and am living paycheck to paycheck at this point, just trying to hang on.

I am so scared about the business. I know that I can file for personal bankruptcy, but what about the cc debt in the companys name??

And, like I said, we have been living on cc's for the past year, for essential needs. No large purchases, but lots of small ones. Now taht DH has a job, after he starts receiving paychecks, we will have enough to support ourselves, IF I dont have to make the payments on the cc's. But I am scared becasue we used the cc's up until the first of this month.

What do I do, where do I start.

Thanks

[SinkingFast]

Most of us here are personal BK Filers. We don't know much about business BK. I do remember someone here a while ago saying their attny advised to let their business die a natural death and then file personal BK. Evidently, as much as the New Law is a headache for personal filers, it's supposedly worse for business filers.

So maybe that's an option for you. Let the business die a natural death. You'll be coming up on the end of the quarter in December. Close the doors, file your final taxes and be done with it. Since you're the owner, I guess ultimately you'd be responsible for the business' debts. Just roll them into your personal BK filing. Be sure and ask attnys about this during Consults.

Don't worry about the wait. You're gonna need to wait to file anyway. Partly cause you're gonna wanna Consult with several attnys to find the right one for you. Partly 'cause it's gonna take you a while to gather all the docs you'll need. And, partly cause of the 70/90 Day Rule.

That's a part of the BK Laws. Old and New. A time period where charges can be considered fraudulent. New Law is 70/90 days. 70 days on Cash Advances and Convenience Checks use in excess of $700. 90 days on CC use in excess of $500. As the Law reads, "for the purchase of luxury goods and services". But just to be on the safe side, you're best off to wait until after that time frame to file anyway.

Schedule at least 2-3 Consults with different attnys. Generally Consults are free and you can learn a lot. That also gives you a chance to meet different ones and see who you might be comfortable working with.

[HHM]

Question 1. Did your husband create a separate legal business entity, i.e. a corporation, Limited Liability Company, or Limited Partnership. To do so would have required filing articles of incorporation with you State Government.
If no, then no separate legal entity exists and all business debt is individual debt, and even if a separate legal entity exists, odds are, you are still liable for the debt, nearly all business credit cards and lines of credit for small business have a personal guarantee clauses.

In any event, I agree with SinkingFast, let the business just fade away.

Odds are, the business debt can be lumped in with whatever BK you decide to do (this is very common, there are many failed businesses out there).

On a side note, you are not alone. The main reason for this website is to demonstrate that to you. Although its very difficult, but its time to stop crying and make a plan.

Step 0. Time to swallow pride and face reality.
Step 1. Inventory your financial lives, assets, debts, income, expenses etc, (absolutely everything). What do you own, who do you owe, who owes you, how much do you make, what are your fixed and variable expenses. As for debts, get all the most recent statements together. Find ways of cutting expenses so you don't incur more debt (which might mean no longer paying credit cards)
Step 2. Contact several (2-3) BK lawyers in your areas and schedule consultations. Although it may hurt your pride a little, the best thing you can do is ask people you know if they know of any good lawyers, its better to get a personal referral from someone who has worked with a particular attorney than randomly calling from a phone book.

If you can do those 3 things, I gaurantee, things will start looking brighter. Action begets action, start moving foward...

[Minnymouth]

Good advice...............

You can't find the light at the end of the tunnel until you start walking down the right road...........

[wrinkleigh]

Lets see,

We did create a corporation, an S corp. Thats why I am not sure if the debt can be rolled into our personal bankruptcy. I will be sure to ask though.

I really think that I have worked myself into a corner income and purchase wise. Purchase wise, it makes sense to wait the 90 days until the charges, etc are gone. I dont have any cash advances, but I did have to pay my mortgage with a convenience check this month (465.00) due to the job situation.

On the other hand, I am worried about income. DH's new job has A LOT of overtime in the winter months, specifically starting about mid November until it warms up again. So we will probably show a good bit of income for the wintter months. But that will slow wayyyy down during the summer months.

So essentially, whats better, to file while they "could" hit me with fradulant charges, or to wait until we may show too much income. Knowing the income is temporary.

I never ever thought I would worry about too much income. I could just scream.

I also worry so much about what will happen if I just STOP paying minimim payments on credit cards. How long will it take them to actually try and garnish my wages? If I stop paying now, I can pay my own bills, but I am really afraid to stop.

[HHM]

Do you know what your state's median income is? That will give you some guidance on whether your husbands income is too much or not. I am sure somewhere on this site there is a link to find out state median incomes, but I don't know what it is.

As for the business debt, yes, it can be rolled in, because there is an aspect of the debt that you would be personally liable for, and you can discharge that aspect of personal liability in a personal BK.

Anyway, if your combined income is less than the median, you have nothing to worry about...

As for garnishment, the creditors would have to sue you first, get a judgement against you, etc, etc. You can be delinquent on your credit cards for 12 to 18 MONTHS before anyone will even start to "think" about suing you. So I wouldn't worry about garnishment. (granted, if you stop paying, it won't do any wonders for your credit, but you need to get your priorities).

Typically, if a person does not have enough money to pay expenses, I recommend two things (1) evaluate your lifestyle and expenses, i.e. do you need both a land line phone and a cell phone (no), do you need super fast internet access (try down grading to the next level), do you need all the cool expanded cable channels (no, try down grading to the minimum), do you need the extra lean sirloin ground beef, or can you get buy with regular, DON'T eat out, DON'T pay bills on credit, down grade your auto insurance to minimum liability, minimize your per-paycheck tax withholding by claiming the maximum exemptions, cancel all magazine and newspaper subscriptions (or atleast don't renew them), go to the grocery store ONLY ONCE per week; this saves on gas and forces you to plan you meals, the trick is you must force yourself not to go back during the week for little things (the little things add up), brew your own coffe (or stop drinking coffee), no alcohol, cancel gym memberships (depending on the cancelation penalty) and take-up walking or running, make sure your bank does not charge you fees on your checking or savings account, if they do, try to get that changed, or switch banks, (2) if tightening the reins and adjusting your lifestyle won't work, and honestly, for most people considering BK, it won't be enough...then I recommend that you stop making payment on unsecured credit cards. Honestly, you may have no choice, and its the least damaging option and can buy you some time. Unless you can make more money, there really isn't anything else you can do.

However, once you stop paying your credit cards, you are essentially committing yourself to filing BK at some point...so just understand that fact.

Again, do a complete financial inventory.

[Emmy]

Here is the link for the median income by state and family size:

http://www.usdoj.gov/ust/eo/bapcpa/20061001/bci_data/median_income_table.htm

[wrinkleigh]

Thanks everyone. It is nice to see that we are not alone, your kind words are appreciated.

We are already down to "bear bones" at this point. The only thing on the list we have "not" cut out is the land line phone, but DH is going to go ahead and take care of that. We cut back so much to try and get this business going, there is just nothing left to cut.

I do think that we are committed to bankruptcy at this point. There is no way we can pay off the companies debt. I would be making minimum payments till the day I die. Its just a question of "when" for us.

Median income for my state apprears to be 62000.00. We would not average that out even with his overtime this winter. I guess that we can just wait until Dec, and look at it again. Glad no one has our cell phone numbers.

I have an appointment with an attorney tomorrow. We'll see what he says.

Thanks for the help, and the support.

[HHM]

Sounds good, if your combined income even with your husbands overtime is less than the state median, you are good to go for a chapter 7. The main thing you will want to discuss with the attorney is the business issues.

Incidentally, will your husband accompany you to the appointment with the attorney? If not, he should. For that matter, does he even know you are seeing an attorney...you may want to discuss this with your husband first, and he really needs to go with you to see the attorney.

If you go to the attorney, please report back about what he says regarding the business debt so we can all get a better idea, this site is geared more toward personal bankruptcies, so we could benefit from some insight on what really happens with business debt.

[wrinkleigh]

Oh he absolutely knows, we are 100% in this together.

But, starting the new job, he cant get off work to go, he is still on 90 days probation. Right now, that job is the only**good** thing we have going. I have all the info, and will have to do the best I can, since it is just an initial consultation. We will beg time off, when it is absolutely necessary. But, I have to handle what I can on my own for now. I will be sure to report back.

I have spent the last two weeks reading. I have an inventory of everything we have(including business), personal belongings, and values for cars, my home, plus what we owe on all of the above.. 3 years of tax returns, and 3 moths worth of every credit card statement, and 3 months of bank statements. On the business side, DH has got all that together. I am going prepared, hopefully, I will get as much advice as I can, and try to figure out where to go from here.

[ekelly4200]

[QUOTE=wrinkleigh;69304]Oh he absolutely knows, we are 100% in this together.

But, starting the new job, he cant get off work to go, he is still on 90 days probation. Right now, that job is the only**good** thing we have going. I have all the info, and will have to do the best I can, since it is just an initial consultation. We will beg time off, when it is absolutely necessary. But, I have to handle what I can on my own for now. I will be sure to report back.


Are you talking about your dh going to meetings with the lawyer? We are filing joint and dh never had to step foot in the office. I had all the meetings and dropped off all paperwork. He went one time last week to bring the paperwork home for me to sign since this time I could not make it. As long as you know all the details I dont see a problem.

[SinkingFast]

Personally, Wrink,.............. If you're fairly certain you're gonna file BK, until you know for sure you're gonna be Ch 7, keep the Land Line phone turned on.

If you wind up in a Ch 13, that's an allowable expense with the Court that you could cut later to give your budget some buffer room.

Same thing with any other Court allowable budget "fats" that you have not trimmed yet. Leave them in place until you know for sure what's gonna happen.