blindsided at 341 meeting

[PDXbk]

Is anyone else self-employed, like me? At our 341 today the trustee said he will take my accounts receivable -- $2400! That's money that I was owed by my clients -- money my family must have to live on. Why should it be any different from wages???

Does anyone know a defense to this?

[jennga]

Did you have an attorney? I don't really have an answer to your question, but I know my attorney kept asking me if anybody owed me money and I would say you mean other than my employer and he said yes, other than your employer. So it seems to me that that would be the same thing. I don't understand how he would take that knowing it was your paycheck, even though it is called accounts receivable. I don't get it.

[bkfiler]

didnt you claim it in your exemptions?

what chapter did you file?

asset case or no asset?

[jennga]

filed ch7, no asset. It was not an exemption, just figured into my monthly income (I think schedule J) the sheet where you figure out your gross and net and deduction and such. Didn't have to put my regular earnings as exempt. Don't know if that helps, sounds like being self employed has different implications. Maybe one of the Mods can help you.

[bkfiler]

i was asking the original poster hehe but thanks.

so did you have money someone owed you?

[jennga]

Yea, Bkfiler, I caught that one, somehow I thought you were the one that started the post, sorry about that.

[AAAArt]

I have a somewhat similar situation. I receive what I always considered as salary, but is actually a "solicitor's fee" from a company whom I referred my old clients to. First attorney I met with, told me it's not wages for which you are working every day to keep earning, it will be seen as an asset, so the trustee will take it. Even called one of the trustee's and asked his opinion and he agreed.
My current attorney says that it is "up in the air", because the contract specifically states that it cannot be "assigned" and if it can not, then the BK courts don't normally take it.
We're talking about waht used to be $18,000 a year, then $16,000 and just as I filed I found out that it was going to take a 20% cut, so now we're down to less thaan $13,000, but still quite a hit.
However I did learn that the tustee has to allow you to pay taxes out of it. So, by the time you figure out your tax bracket (18% - 23% - 28% or whatever) plus 15.5% Soc. Security Self Employment tax plus your state tax...well I was only keeping half of it at most after all of that. So, while I hope that I can keep it, the fact was that getting rid of the other monthly payments more than made up for it.
Long story...Short answer. Yes, they can do that and I agree that it sucks...BUT hit the Trustee up for the various taxes you owe on it at least or you will be going in the hole even deeper.

[bkfiler]

dont forget trustees stick together and they are ONLY there to get your money. period. that is how they make money. its in their best interest to take what they can. never forget that.

im glad you went with one that will argue with you. i would keep calling around about that one.

how many years do they keep taking is supposedly? cant you claim it in an exemption?


good lord. im so sorry if that is taken from you guys. im in shock.

[PDXbk]

Thanks, everyone, for your replies.

AAArt - your point is the most applicable here. I agree they can take it -- though why, oh why, there's not a separate exemption for the self-employed's wages I don't know. The exemption we used - we filed pro-se - was for wages; there is no exemption for A/R).

But thanks, AAArt, for noting the tax deduction. At least I'll be able to reduce the $2400 to around $1200. That's a BIG help!

Thanks again to everyone.

[bkfiler]

art,

i would keep calling around about that one.


art, pdxbk,

how many years do they keep taking it supposedly?

[SleeplessInMI]

One thing I always hate about being self employed is that people think that since you work for yourself you automatically have alot of money... Sounds like your Trustee was one of those people.

[StaciMM]

I believe that only the current accounts receivable is an issue. If you're owed money, that is an asset. I can't think of anything to get around the self employed dilemma though.

art,

i would keep calling around about that one.


art, pdxbk,

how many years do they keep taking it supposedly?

[bkfiler]

"I believe that only the current accounts receivable is an issue. If you're owed money, that is an asset."

but the assests protected like all the other assests right?

they never answered the questions i asked above. how long can they take the a/r ?

[AAAArt]

art,

i would keep calling around about that one. art, pdxbk,

how many years do they keep taking it supposedly?

Three attorneys all said the same thing, with my current atty. being the most optimistic.

How long? Sounded like forever, or until all creditors are paid off. There is one caveat in my contract however, that neither the person paying it nor myself were aware of and that is that the contract can be cancelled by either party, without any reason given, upon 30 days notice. Naturally, I can't stop it because of the legal ramifications, but I can guarantee that the Trustee isn't going to get much of it either.
This is not some sort of an end run around the law. If cancelled, I will never see another penny of it, but owner of company feels that the Trustee did nothing to earn it and he will terminate the contract if they take it.
He's a really nice guy and I would much rather see him and his family get the extra income. I'll prob. get a free lunch or dinner anytime that I am in town, but I get that now, so there will be absolutely no financial benefit for me.
And, before you ask, I agree. I think it sucks! Art

[bkfiler]

art was that a chapter 7, no asset case?