Question about money in our LLC's bank account?

[AllMyFault]

The Trustee required 4 yrs of corp tax returns from me as well as personal returns even though I only filed Ch 7 personally.

I think that it is SOP for the Trustee to require multiple years to determine the historical income and trends of your LLC/S-corp. My S Corp did not have much in tangible assets either (computers/printers/software etc). But the Trustee did question at length the reduction in income yr over yr at the 341. I also had to provide a detailed P&L YTD.

If your business can not run without you and has nothing to sell, then the Trustee will probably leave it alone. Your seasonal income could distort your schedules especially if you file in Feb and your seasonal income is Oct to Feb. What is your attorney saying about the business income aspect?

Our LLC was just started in September 09' so their is no history. Hopefully that will make it a little easier on us.
With regard to my income; the attorneys I've seen (2) have both said that the court will look at the last 6 months deposits (cash and checks) prior to file date to determine my monthly income. They have both made it sound very simple which concerns me...

[Feelbad]

If your business can not run without you and has nothing to sell, then the Trustee will probably leave it alone. Your seasonal income could distort your schedules especially if you file in Feb and your seasonal income is Oct to Feb. What is your attorney saying about the business income aspect?

My wife and I are preparing to file. My income comes from an in home business with no employees (other than me) that is an LLC. The income can come in large amounts but is very irregular, and I have been able to meet the means test at any point in the last year.

I am worried that the LLC has just received income that will be sufficient to pay our non credit card bills for 90 days, but the LLC is unlikely to receive any more in the next 90 days. The LLC had not received income for almost 90 days prior to the most recent deposit. There is no other outstanding A/R.

We expect to file in the next 2 weeks. I was concerned that if the court took the cash in the LLC we would not be able to pay our bills after we filed. My attorney told me that the assets of the LLC will not be considered as personal assets but the trustee will want to see the P&L to confirm my income. I provided the P&L for the life of the business (18 months) as well as bank statements.

This thread makes me believe this may be wrong. I'd like to hear more on the subject if others can help. Would assets of the LLC, cash less than $8k and other (desk, computer, etc)at less than $2k be exempt under the personal property exemption?

[StartingOver08]

My attorney was very specific...an S Corp (or LLC) is considered an asset of the debtor. The assets flow thru to the debtor - cash in the business bank account belongs to the BK estate. Did you specifically tell your attorney that you have $8k of NON-EXEMPT funds sitting in your business bank account? I would clarify with him and do some independent checking around to verify. I know there are differences in various BK districts, but if you have $8k sitting in an account that is not exempt, I would be surprized if the Trustee just ignored it.

[frogger]

My attorney told me that the assets of the LLC will not be considered as personal assets but the trustee will want to see the P&L to confirm my income.

The LLC assets are not your personal assets. They are assets of the corporation.

The corporation is your asset.

[JustDamn]

Maybe MSBK can chime in here (if he sees it)...

One thing which sounds different in regards to my LLC and the op's...I've got several business cc's/lines of credit that have a personal guarantee (in addition to personal cc's), so that may be a factor as well in my situation.

I won't even be filling out any paperwork until probably feb. or later, so I don't have a lot of the details as I've only met with my attorney for one 90 min. session.

So maybe there's hope for the op's LLC as it's brand new...I don't know, but good luck.

[Feelbad]

The LLC assets are not your personal assets. They are assets of the corporation.

The corporation is your asset.

I am trying to understand this.

So they will take the LLC? The $8k? My desk, computer and monitor? What if the LLC has expense to still be paid out of the $8k?

If I have the check from the client and have not deposited it yet, but have not executed the agreement (I have not signed it yet, client has signed) that requires the payment, is it a pending transaction and not yet A/R? Can I sign the contract the day after I file and deposit the check then?

I appreciate the help!

[AllMyFault]

I am trying to understand this.

So they will take the LLC? The $8k? My desk, computer and monitor? What if the LLC has expense to still be paid out of the $8k?

If I have the check from the client and have not deposited it yet, but have not executed the agreement (I have not signed it yet, client has signed) that requires the payment, is it a pending transaction and not yet A/R? Can I sign the contract the day after I file and deposit the check then?

I appreciate the help!

Hi Feelbad...
I'm still confused by this issue as well.

[JustDamn]

Time for some attorney visits, might make you feel a lot better.

[Feelbad]

My attorney did make me feel better. Unfortunately after some research I think she may be wrong.

[JustDamn]

damn...that's not good. Can you get a second opinion or have you already hired your attorney? It might be worth it to pay for an hour with a couple of other bk attorney's as well.

I know you can get "free" consults, but I'd think it might be worth your while to buy an hour of "real" time to be able to get some in-depth advice...time is money as we all know.

Good luck.

J

[AllMyFault]

Same thing I'm getting....conflicting advice. What do you do? Keep going to different attorneys until you get what you want to hear? No, but they all have different opinions on different things.....I thought law was black and white....Apparently not!

[JustDamn]

Also, I would try and find bk attorney's who also are business law atts. as well.

J

[AllMyFault]

Also, I would try and find bk attorney's who also are business law atts. as well.

J

One that I saw is....supposedly

[onwards]

I believe I've read here, and what an attorney told me that if a member of an LLC files bk, then that LLC is no longer a viable entity.

Folks, I just went through this. My wife and I own an LLC in CA, which is a cashflow business (no tangible assets). The trustee looked at it, examined the books, asked for all bank statements since the beginning of the year to verify for himself that indeed it is as I said it was, and then exempted it from proceedings. I just got discharged and the business is still alive and kicking in the exact same form as before.

It generates $40K per month and pays out about as much, so it's not an issue of amounts. It's just a matter of providing solid records. The LLC had at different points in time during the proceedings up to $50,000 in the account (money coming in with payments yet to go out) and was not touched.

So no, you don't automatically lose a business. I am happy to answer any questions based on my experience, but I just wanted to let the OP know about my own very recent experience (I filed late august this year and got discharged last week).

[JustDamn]

doh....what makes you think you may be getting erroneous advice?