Self Employed In Ca. 703 or 704 asset protection?

[WanabeFree]

I am in the process of deciding to finally file Ch7 in California. the issue is we have two choices as to how to protect our remaining assets. We are mostly filing to remove the liability from the home and may walk eventually. The Problem is that although we currently own our home it is about 100k upside down and owe about 117k on a first and 107k on a heloc. So we don't really need to use the traditional (704)Homestead exemption to protect any home equity. Fortunately In Ca. you can use plan b the (703) homestead exemption to protect up to I believe $20,750.00 in any other non exempt assets. We want to protect a 1996 motor home valued at about 10k and 2001 pickup and a 1984 jeep plus various other things that pretty much use up all of that 20k exemption. The big thing is I am self employed as a Low voltage contractor and almost all of my business is billed on a net 30~60 day receivable basis. I often have 4k or more on the books as receivables and 2k or more in my business checking account. I do not want to give up any cash or receivables because I need that to operate my business. Will I have to close my business for 30~60 days prior to filing to clear out those accounts in order to avoid getting hit by the Trustee.

[DeadManCrawling]

I am not familiar with CA law specifically.

In general, yes you would need to find a way to exempt the accounts receivable.

You could close the business for long enough to collect.

You could ask your clients to prepay or pay early. I did this, with a similar type of business and it worked fine. All were quite understanding, but my reason given was this: Planning and making some changes for retirement funding.

You should also look to see if CA has any exemptions for earned wages, paid or unpaid. Here in FL we have an exemption that allows us to keep 6 months of wages earned or unearned, in the bank or as A/R, up to 500/week. If you have that type of exemption, it could solve this for you.

You may have to dig deep. Most of the attorneys we encountered were totally unaware of this exemption. We went with one who was not familiar with it, but who researched it and agreed, but also met our other expectations in terms of his practice.

[WanabeFree]

I am not familiar with CA law specifically.

In general, yes you would need to find a way to exempt the accounts receivable.

You could close the business for long enough to collect.

You could ask your clients to prepay or pay early. I did this, with a similar type of business and it worked fine. All were quite understanding, but my reason given was this: Planning and making some changes for retirement funding.

You should also look to see if CA has any exemptions for earned wages, paid or unpaid. Here in FL we have an exemption that allows us to keep 6 months of wages earned or unearned, in the bank or as A/R, up to 500/week. If you have that type of exemption, it could solve this for you.

You may have to dig deep. Most of the attorneys we encountered were totally unaware of this exemption. We went with one who was not familiar with it, but who researched it and agreed, but also met our other expectations in terms of his practice.

I did a little searching and it seams that if I used the plan a (704) I could keep up to 75 % of my last months wages but this won,t work for me because I need to use Plan B (703) to protect my other assets up to $20,725.00. I am not protecting my home just all other non exempt assets.
I think with some creative pre-planning I can make it work but i wont know until I actually get everything together and am able to time my filing date.
I also am a little unclear as to what effect my wife being disabled and receiving social security and disability benefits other than it does not count in the means test calculations as disposable income.
Any Idea how they would value a 14 yr old motor-home. I checked on NADA and they say it about 10k low retail and 13k high. I am thinking maybe 6k wholesale?

[DeadManCrawling]

I would take the mobile home to a reseller and ask them what they would give you, in cash, on the spot, right there at that moment.

That can be used, though a trustee may counter with NADA value. Then you are in a bit of a standoff, but trustees do not want your mobile. They want to use it as leverage to get you to pay to keep it. Most of the time, they back down if they may end up actually owning it and selling it.

We had SS income as well, and it was not used on the means test or on any other schedule. I think this is rather uncommon but cannot say for sure.