Biggest decision of my life...

[jblaska]

Hello everyone,

Thank goodness I found this site. I have been looking for a little help and gain some knowledge before I approach an attorney to follow through with this. Here is my situation:

I am 27, left my job back in 7/06 to open my own business. Since that time, I had been living off my 401k and savings. I can see that very shortly it is going to run out. Business wise, the store is starting to very slowly pay its own bills. I have since filed for unemployment and have been approved for 26 weeks of it. What I have been doing is using my personal credit cards to pay for expenses at home and also using them to purchase some inventory for the store. I then use the business (if it can afford it) or my own unemployment checks to pay the payments.

I have decided that I may file to help get me back on my feet and as a last resort. I have tried to call the debt counselors and they do nothing more than negotiate a better interest rate for me. Also, combo loans are out of the question because I have no current "job". I have considered using cash advances to help me out a little and I know the risks of doing that but my understanding is that I can "reaffirm" those cc's.

Also, I was told that if I include my house in the BK, I will have 6-8 months before I have to leave. My buddy also told me that during that time, I wouldnt have to make payments and he saved all that money so by the time he had to leave, he had quite a bit saved up to move to another place. Is this true? Here is my breakdown:

CC's and personal loans: $40,000
Mortgage: $101,000
Equity Line: $34,500
Vehicle: $7600

I would like to keep my LLC in good standing as there are no loans or debts in the company name. I took out personal loans and home equity loan out to start it up. Please help me out. I have no idea what else to do.

Sorry for the long post.

[jblaska]

btw, I live in Michigan.

[Spartan]

You have been mingling your LLC finance with your personal finance. This is going to be tricky. You have been running your LLC the same way you would run a sole proprietorship. They are going to want to see the book.

[jblaska]

i have receipts for the purchases made on cc for the inventory. my bookeeping isnt the best in the world and I have done everything I can to do things the right way. ie. not taking money out of the business and not reporting it as income.

Would the fee the attorney charges to file cover stuff like them going over my records and what not? Also, should I consider using a company such as Proventa or another similar service to have them negotiate down with my creditors a payoff plan? Thanks for the help on this. I would like to know my options before I call an attorney.

[Spartan]

If you own a business, the trustee will want to look at the book. I was asked by the attorneys if I have owned/operated/sold any business in the last 6 years.

I can't tell you if your attorney will still charge you the standard $1400-$1700 fee (not including filing fees). However, they will tell you what their standard fee include, and what other services are not (which will be charged an hourly fee of $200-$250 instead). As far as I know, anything beyond the initial filing, and the 341 meeting, is extra.

I would advise not to worry about initial consult. What you want to prepare, is to makesure you can present your financial situation completely and clearly. The more you can tell them, the better they can advise you on the options you have.

Make a list of all your hard assets. A list of all your liquid assets. A list of your debt, secured and unsecured. Do the same with the LLC. A list of your income, and expenses. People you have sold/transfer assets/properties to, and receive assets/properties from, over the past 2 years, at least. Lawsuit that you are involved in. Claims that you have against you, or you have against others.

Talk to several lawyers. If they all give you the same answers, well, that is most likely what you have to look forward to.

[SinkingFast]

Would the fee the attorney charges to file cover stuff like them going over my records and what not? Also, should I consider using a company such as Proventa or another similar service to have them negotiate down with my creditors a payoff plan? Thanks for the help on this. I would like to know my options before I call an attorney.

Generally not. Most attnys will give you a statement/contract of what services they provide for the "basic" fee paid. Often times, the attny's fee covers assembling and filing your BK petition and appearing with you at your 341. That's pretty much it.

If you run into issues with additional business questions from the Court, an Objection, or an Adversarial from a Creditor, the attny charges more for the additional time. Our attny charges a $2K fee up front just to start and Adversarial. From what I've heard, those are messy and can be rather protracted. Glad we didn't have to deal with any of that.

[jblaska]

should i just not worry too much about the books? I have only been open for less than 6 months. Most of the financing has come from my equity line. Other than that, I may have $12,000 in cc (personal cards) that I have used on and off to buy things for the store (its a small operation with only me running it). The store itself does not have anything in its name.

I am calling an attorney in the morning to see what I can do. I know this is a dumb question, but do the attorneys look out for you in these proceedings or is the whole thing pretty straightforward?

[Spartan]

With regards to having an LLC involved, we can give you general advice that may or may not pertain to your case. Thus it may be simply counter productive, not to mention misleading. We can't exactly tell you whether you need to worry about your book or not.

If your LLC has no asset and is barely making it, then there isn't much the trustee would be interested in. But I can't tell you if they will still get a charging order for any future distribution or not.

Yes, your attorney will offer you the options and advice you on the preferred choice. Yes, if he/she is doing his/her job properly, then he/she will be looking out for you. That is how advocacy works. Needless to say, you need to find a competent lawyer.

Consult 3-4 attorneys. Good luck and keep us updated.

I don't think you have too much to worry about. Just meetings and paperwork and getting sick of telling your story 3-4 times...

[jblaska]

thanks. that is pretty much where the business stands right now. i am only in my fifth month of being open and am about $1000-$1500 short of being in the black.

I do have a meeting face to face with someone tomorrow. He seems like a nice guy. we talked for about 20 minutes on the phone about numerous things. He did mention the 90 day rule of thumb about purchases. If thats the case, I will have to file on Feb. 15th. which would put me 3 months since my last big purchase. I have had a couple hundred since then, but the last big purcfhase was almost $4200 for my cellphones.

I do appreciate the help you guys have given me. I know quite a lot more going into this than before.

On a side note, I have decided to put my house in the bk. I have roughly 12 months before I have to leave so I have plenty of time to save some money up.