nonexempt business assets used to support oneself

[crazycat]

...I"m near the stage of locking in on an attorney to begin the chapter 7 (personal)process (Texas) and am looking for a little more insight before I do...I am self employed,business is an LLC, & sell on the internet and sell items that I keep varying levels of inventory on hand...As I must continue this type of employment, at least in the short term, & depend upon these assets to sell for a profit, what can I expect in their classification as possible non exempt status? I've heard that low value non exempt assets may be ignored by a trustee or offered back to me for a price, but what are we really talking about here? I sell alot of consumer & collector supplies,bags,used books,etc. About 150 diff items(bags,etc) in various stock levels. Not counting the books, value may aggregately be worth $4,000 (my cost). I Have about 2,000 books (paid about $3,000)What might I expect here? Thanks in advance?

[HHM]

Since you are filing BK, you may want to rethink this "business plan", but I digress...

You are correct, the assets are not exempt, but you are allowed to maintain assets to run a business when the business is a means of support for yourself.

[crazycat]

..Are there any guidelines in law that state the limits of those assets? Is there a formula? I haven't read to date anywhere about being allowed to maintain assets to run a business when the business is a means of support for yourself. Are there any reference material available? Thanks!

[lrprn]

..Are there any guidelines in law that state the limits of those assets? Is there a formula? I haven't read to date anywhere about being allowed to maintain assets to run a business when the business is a means of support for yourself. Are there any reference material available? Thanks!

Here's several legal websites that discuss what's important when you are considering filing Ch 7 when you own a business:

http://bankruptcy.lawyers.com/Small-Business-Bankruptcy-Relief.html

http://www.dianedrain.com/Bankruptcy/BankruptcyFAQ/BKFAQSmallBusiness.htm

http://www.lawinfo.com/index.cfm/fuseaction/client.lawarea/categoryid/1118

[crazycat]

How are nonexempt business assets used to support oneself & family deemed exempt...

..Thanks for those links, but it wasn't mentioned in even indirect terms about how business assets are exempted when filing a chapter 7 personal bankruptcy while in parallel the business remains running & is not filing for protection of it's own...My situation is that The business, a Texas based LLC, is small but highly profitable. Sales have gradually slipped over the past 3 years and do directly affect ability to pay accumulated debt. Much of the debt acrued years ago , 2001, 2002 and with interest, etc. has simply been a crushing burden...any other comments or futher insights? all appreciated. Thanks

[HHM]

Sorry, I only just noticed that you mentioned that the company is an LLC. You should be fine. The corp. veil equally applies to BK. So long as you kept up your corp formalities and do not routinely commingle personal and business assets, the trustee cannot touch the LLC's assets. Granted, your "membership interest" in the LLC is an asset of the BK estate, but trustees don't really care because there is no ready market for small companies like this and the trustee is not interested in running the company.

In any event, since a business is involved, you should get an attorney to handle your Bk.

We have had many individuals file BK with a business and haven't had a problem. Since the assets are contained within the LLC and presumably are true business assets i.e. inventory, those assets will not be part of the BK estate (hence no need for an exemption)

[krielly]

We actually had to file a 13 to protect my husband's business assets.

His business was an LLC, and he was self employed, but he had personally bought the items as a sole proprietor. (personal, not business loans) on most items.

[crazycat]

Can You Be Forced Into a Chapter 13 After Filing Chapter 7?

..as I had mentioned in an earlier thread, I"m near the stage of locking in on an attorney to begin the chapter 7 (personal) process (Texas) and am looking for a little more insight before I do...I am self employed,business is an LLC, & sell on the internet and sell items that I keep varying levels of inventory on hand (about $3-$5k mixed items, new & used, ebay type stuff,etc...As I must continue this type of employment, at least in the short term, & depend upon these assets to sell for a profit- I plan on continuing the business while I file for personal chapter 7..I am not charging any longer on CC's for any stock replenishment (or anything) & trying to run as lean as possible...While my current net income is below the median State (Texas) requirements (for a family of 5) for personal chapter 7 , I still will have (on Paper) perhaps $1,500 in un allocated funds (after personal requirements) available if all the unsecured debt is wiped out by the (soon to be) chapter 7 (as the business is profitable)...because of this eventual outcome, Can I be forced into a chapter 13 rather than my plan of chapter 7? Thanks!

[No Gravy]

Since you are filing BK, you may want to rethink this "business plan", but I digress...

Wow. That came off as judgmental and uncalled for...

[soleprop]

HHM has a dry wit, you'll get used to it! i like it, and well, his posts are *very* helpful.

[No Gravy]

his posts are *very* helpful.

I'm not disputing that for a moment.