Future Income

[kathy4530050]

Hi--
I'm new to this forum and think it's really, really great. I can't believe how much I have learned in the past few hours. I've posted a few questions, and will probably post a lot more before this nightmare is over. Here's my next question:

I'm self-employed and my 2008 income was really dismal. In fact, I had NO income for 6 months. So, I checked out my options, hired a lawyer, and decided to file Chapter 7. Then, almost as soon as I decided to file, business started picking up. In fact, I think now that 09 will be pretty good! Not good enough to address 100k of debt and avoid the bk, but good enough to get me back on my feet again.

So the question is this: if my income looks pretty good for 09, is there any way that any of this income could be confiscated after the bk is over?? Will the court ever want to look at my 09 return and decide that I made too much money?

And what about the money that I earn during the 4-5 months DURING the bk? Is it possible that this could get me in trouble if it looks like I'm doing ok now?

Thanks!!

[StartingOver08]

You can earn more income after you file.

The BK filing is a snap shot in time - your financial condition as of a date certain using the 6 months prior income.

If your business picks up in 2009 the Trustee will not ask for the income. When you are self-employeed you generally have to provide more paperwork than a typical Ch 7 filer (provide more cc statements, bank statements etc). The Trustee is looking for any asset he/she can turn to cash.

Once you are discharged the Trustee leaves you alone - except if you have an inheritance within 180 days after discharge. There is a good thread on this in this forum, do a search for it.

The Trustee may want any refund you get for your 2009 Taxes, prorated to the date of filing. This seems to be very typical.

[kathy4530050]

Good

THANKS. This is good news. I won't be getting a tax refund, but will likely owe a little as I didn't make any quarterly tax payments--business was that bad. My business is consulting and so I have very little in the way of assets. This is a relief. Thanks for the post.

[StartingOver08]

I forgot to mention to you that your Business is considered an asset.

All receiveables due to you as of the filing date belong to the Trustee.
Money earned after the filing date is yours.

[kathy4530050]

I received payment on 2 invoices last week and, as of today, I have no accounts receivable. I don't have to invoice anyone now. My projects with clients are ongoing and I can wait to invoice until later, so at least I have that going for me. . . . thanks

[StartingOver08]

Be careful with that....usually the money is earned at a point in time. The Trustee is looking for any funds that you have earned but not been paid. I don't think the measure is 'billed' income, I think the measure is earned income. (This is based on my own experience, maybe someone else can jump in like HHM or one of the attorney's on this site).

[kathy4530050]

Hmmmm

I don't know about this. I usually invoice clients when "chunks" of a project have been completed. It doesn't make sense to invoice monthly when the client doesn't yet have a deliverable. That makes sense, doesn't it?

[StartingOver08]

How is your business organized? Is it a sole prop? a S-Corp?

Are you filing personally? Because the entire business (no matter the type of organization) is considered an asset of the BK estate because you own it.

Mine was a S-Corp. I had debt in the S-corp name guaranteed by me personally. I had to shut down the S-corp after filing and then continue doing business as an individual. I will eventually open another S-Corp because it is much better for my federal taxes, but this is a real issue with small business and filing BK.