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Bankruptcy or not..SO terrified...eBay/Amazon Seller for 20 years

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  • Bankruptcy or not..SO terrified...eBay/Amazon Seller for 20 years

    Hi all. New to this forum, and I'm currently in tears trying to figure out what to do. I've been reading through the forum, and there seems to be a lot of despair but also a lot of hope, so I'm hoping maybe you fine folks who have been in this quandary - or at least a similar one - can help me out. I'm sorry for the length of this, and if you read through, I appreciate it!

    I have been a seller on Amazon/eBay/ for 20 years in Virginia. I started my eBay account in 1996 and started selling in 1998. I started on Amazon in 2000. It started as a way to make extra side money in the beginning, but it quickly turned into something I could do from home and make an actual income while raising my son. My husband at the time had a full time job, and we were doing well. Long story, but it eventually went from thrift store stuff (books, VHS tapes) into new product sourced from actual vendors. For many years, I was grossing $700K+ in sales.

    Flash forward to now. My now ex-husband decided he wanted to move to California to pursue filmmaking. He had NO experience. But since both of our jobs could move anywhere, I agreed. That was 2007. It's now 2018, he left me for another woman in 2014, and I'm now divorced. He quit his job, and we racked up a lot of debt trying to make my business take on two incomes in much more expensive city. Then he was gone. It's expensive as hell to live here, and with the influx of Chinese sellers on eBay and Amazon, my gross sales went down and margins went with it. I STUPIDLY kept trying to keep it going after the divorce by taking out loans and using credit cards, thinking things would improve. Over the last year, it's taken me longer and longer to pay my vendor on 30-day terms (taking 50-60 days), and this morning, the inevitable happened. My vendor called and said my current order was on hold until I get caught up. Without inventory to sell, I will NEVER get caught up. I told her so, and they gave me a "one-time" courtesy with the promise I'd make a $2500 payment by the 30th and another $2000 payment two weeks later. This is on top of credit card bills, living expenses, etc.

    So I realized I'm really in the thick of it. I'm in trouble. I have some options, but I just don't know what to do at this point, and I guess I'm looking for other people who've been there, especially if you've been out of the work force and doing your own thing for years and had to file bankruptcy and get a job - and did you make it.

    Here's my situation and questions: (I hope this isn't too much!!) I'm in California and a sole proprietor if that's helpful to these issues/questions:

    I talked to three different BR attorneys today for free consultations. I think I'm more confused than when I started. If I attempt to keep paying my vendor so I can try to keep the business afloat a little while longer while I try to get a job or get some other source of income, they may consider that "preferred" if I'm not also trying to pay my OTHER creditors, which could be a problem if I try to file. The vendor has me on 30-day credit terms which I thought would be considered differently than credit cards. So I either have to pay everyone or no one? What would be the potential problem if this "preferred" situation arises? I'm a bit confused as to what would happen.

    I'm going to lose my Amazon account if I file BR - no doubt about it. I have a loan with them that gets paid out of my sales, and I have inventory at their warehouses. Once I hit the BR button and they find out, they will close my account, seize all the inventory in their warehouses to cover what they can, and that's that. That was a HUGE chunk of my income - gone. I do still have around 2K in inventory (IF I could sell at a decent market value) in inventory sitting in my garage. Most of my stuff gets sent to Amazon. Should I try to have a big yard sale and just move it out?

    I have a relatively small amount of debt (compared to my other debt) via Paypal credit. I've been reading here, and it seems some people who filed BR did not lose their seller account with eBay or their Paypal seller account - their Paypal credit account was just closed. Has that been the case for you if you were an eBay seller?? I'd still like to try to make extra money there even if I get a job - and it may be my ONLY source of income for awhile until that happens given my length of time out of the job market. I'm hoping my seller status, length of time with them, etc. might factor in somehow.

    I have stocks that are currently valued at 12K. I was trying to hold onto them, but if I decide I want to try to pay my vendor to keep the business going awhile longer, I have to sell them - and I mean TOMORROW - in order to get the money in time for the 1/30 deadline. That would leave me with around 7K to work with until I can figure something out, though I don't know what that is. But there's that quandary again - if I pay my vendor, am I "preferring" them and creating a problem if I DO file for BR? One attorney told me I was just throwing good money after bad if I know the business is failing, but I have no other way to make money right now. Would you sell the stocks and live on it or try to go a little longer until securing some other source of income?

    There is one credit card that's HUGE (20K) and another at around $1500 where my ex-husband is actually the main cardholder and I'm an authorized user. I agreed in the divorce decree that I would accept responsibility for those cards. I couldn't seem to get the same answer out of three attorneys on whether I am liable since I agreed to pay those. All three agreed he'd be stuck with the debt once I filed BR, but my question is whether he could sue me or come after me since I basically signed a binding contract (divorce papers) saying I'd be responsible. One guy said no way, that family court documents aren't as binding as people think. Another said he could possibly sue me (good job getting blood out of this turnip). Thoughts? Has anyone else been in this situation with divorce?

    Would you use the stock money to try to keep the business going a little longer?
    File BR and keep that 12K to try to live on for awhile? (In CA, 25K in assets is excluded, so I get to keep my 20 year old car and the stock - I have nothing else.)
    Hope you die in your sleep?

    Any advice or tips would be so appreciated. I basically have a week to figure this all out, and I'm TERRIFIED!!! I don't want to be homeless!!!!

    Thanks if you read this far. I really, really appreciate it. <3

  • #2
    I'm sorry you're so stressed. I can answer one thing re: the preferential payments to creditors. What happens to you is: nothing. If trustee decides to pursue it, they go back to those creditors and tell them they have to give some of the money back to be spread evenly among your other creditors. At that hypothetical point, you've already decided the business is done, so your good relationship with creditors is already done, as well, right? So not a lot to worry about there.

    The larger concern is whether you sink another penny into a business you know is going to fail. See, when you decide on bk, you really have to start looking at things differently. Your car is 20 years old? I would address that. I would stock the groceries. I would pay the bills you will still have after bk and keep them current. But if I knew in my heart that any money thrown into the business was just buying a little more time until The Day of ultimate business failure ... I would have to picture that money in my mind just like the attorney said: swirling down the toilet. Once it's gone, you're not getting it back. Think about what they will do with it or how much they "need" it vs. your own needs.


    • #3
      Thanks for giving me a little more head's up on the preferential payments issue, Chrysalis. The amount they want from me is $2500 by next week. If they tried to spread that out among my other creditors, they'd probably get a nickle each. LOL

      I'm trying to do 40 things at once just to keep going long enough to figure out if I can actually get a job that pays better than minimum wage. My friends all think, if marketed correctly, I can get a great job with the skills I've acquired running this business for so long. I did medical transcription before I started, but my last job was over 20 years ago, and that world has changed DRAMATICALLY. I'm still applying for some transcription jobs, though. I'd honestly love to see if I could come up with new product lines to try to keep this going - but I hear you. I really do! It's that "failure" thing right now.

      I also don't want the ex when he finds out he's stuck with a 20K credit card that was in his name. He was an abusive jerk, and he married a lawyer. She seems to be level headed (unlike him), so I'd like to think she'd tell him it's going to cost him time and money to come after me for something I clearly don't have anyway. I just wish one of those BR lawyers had a more definitive answer. One said "no way," one wasn't "sure," and one was like "he probably won't." Sigh.

      Off to apply for some more jobs!! If anybody else has any thoughts, I'm open.


      • #4
        Barbiegal48, I agree with Chrysalis about not sinking another penny into a business that is going to fail Unfortunately, just prior to my Chapter 13, I foolishly used the small proceeds from the sale of a house towards keeping my business going. My business lease was behind six months and I paid it. Then all the thanks I got for that was my landlord came back with a new bill for $17K about fees I owed for property taxes, water and snow removal. This of course while sales were declining.

        That is good advice about taking any money you have right now and purchasing something needed such as a car or home bills. You probably will be able to keep your eBay business, but most likely it will not be enough. eBay has changed and there seems to be much more competition than there was years ago.


        • #5
          Good luck, on your job search.


          • #6
            The payments to the vendor in order to keep them from cutting you off may be considered a contemporaneous exchange that would not be considered a preference. But, I would forget about that. I wouldn't put another penny in that business. You are only prolonging the inevitable. Keeping it going a little longer is not going to help you. Either you can get a good paying job or not. If you throw everything you have into your business and you can't get a good job, you will have nothing left and no job. Sell what you have that you can sell and focus on your job search.

            My understanding is that the only part of a divorce settlement that is not dischargeable is support payments. Assuming that is correct, unless the agreement in the divorce to pay the credit card debt is designated as a form of support payment, your obligations under the agreement are dischargeable in bankruptcy. The attorneys you spoke with probably would not give you a definite answer because they didn't have any way to confirm whether the payments are support payments. Your ex has treated you horribly. Let him be stuck with the debt and don't be afraid of his attorney wife. If she is reasonable, she is likely to tell him that pursuing you will be a waste of time, effort and money.

            I disagree about spending any money to purchase a car. Assuming your car is still in good running condition, you can make it last. Better to use what you have for your living expenses until you have a steady income coming in. You can buy a car later.

            LadyInTheRed is in the black!
            Filed Chap 13 April 2010. Discharged May 2015.
            $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!


            • #7
              Originally posted by LadyInTheRed View Post
              The payments to the vendor in order to keep them from cutting you off may be considered a contemporaneous exchange that would not be considered a preference. But, I would forget about that. I wouldn't put another penny in that business. You are only prolonging the inevitable.
              No truer words ever spoken. These are likely not preferences, but we must always stop throwing good money after bad money. I learned a $300K lesson that they don't teach in any college. I can't afford to learn, umm, make that mistake
              Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
              Status: (Auto) Discharged and Closed! 5/10
              Visit My BKForum Blog: justbroke's Blog

              I am not an attorney. Any advice provided is not legal advice.


              • #8
                You're in Cali, AT&T is hiring in a bunch of areas. I worked for them as a Retail Sales Consultant (full time) for 10 years in New York, and I start the same job this Friday, now I'm in Arizona. They don't need experienced people, they train you for about 3-4 weeks (paid training). It's an easy job, and you get what you put into it. I never made less than $52k yr highest year was $67k yr. Great medical, 401k 6% match, free phone/unlimited (watch your usage/no cursing/bad text/bad websites you will get fired) and you sell the most up to date products.

                Click on this link and pick California from the State drop down list...there's over 190 openings....apply to FULL TIME!!


                AND I just want to say folks here helped me A LOT. I was freaked out and worried too, literally I lost about 15 lbs in a week because I was not eating and nervous as hell. Through Prayer I thank God the Holy Spirit calmed my soul, and gave me the strength and positive outlook on my debts. Sure I'm in a pile of crap right now (around $80k in debt between ccards and 2 vehicles which will be repo'd any day now) but just realize it ain't life or death.

                One thing I will say, is that it is going to feel SOOOOOO GOOOOOODDD when this is all over. Literally just picture it in your mind, think positive!


                • #9
                  Trevor, thank you. That AT&T link looks great. Only problem as with most of the jobs in my area of Massachusetts, they are part time. I presently just started a full time job, was told there was overtime, but now there isn't any. I'm second shift but just requested to be moved to first. If there's no OT I'll have to find a second job to survive.


                  • #10
                    There is a Chapter 11 bankruptcy if you want to keep the business.

                    But, having lost a business, sometimes it really is best to just let it go. If you haven’t, write out a list of your business and personal creditors, you’ll need it for filing anyways.

                    You can take your 20 years of online business experience and turn it into an awesome job. If you’re still in Cali, there is an amazing market for online sales, social media experts, eBay gurus, Amazon ad-writers, reviewers, and so on. A random romp through Craigslist, Indeed, and Dice can turn up those opportunities.

                    A friend, Neville, offers a kopywritingkourse for free, maybe his copy can inspire you to sell the rest of your stock really quick to your email list. Use the inventory dump to plan your exit with the rent, taxes, food, and so on as detailed by other posts on this forum.

                    Research more on business transactions. If you normally make large payments to your suppliers for your business, as long as you explain it, the trustee moves on. The trustee will decide who to pursue. However, even business owners should not make payments to what your state defines as “insiders”. Paying off a parent or sibling before filing is considered bad juju and the trustee can sue to obtain repayment.

                    I’m not happy about the circumstances that led to my needing to close the business, nor needing to file. However, it is a relief to no longer have to fight to stay on the path. I don’t have to file a dozen insurance appeals to get creditors paid. I don’t have to try to influence creditors to bill the proper party. There’s so much stress relief to know I don’t have to pay down an impossible list of creditors an impossible amount plus fees. I also don’t have to feel guilt about not helping others (relatives) with their poor financial decisions leaving me covering their medical expenses because they paid one too much. They stopped asking.

                    And once the unpleasantness is over with, I’ll be able to look forward to the future and plan for my retirement. Save for a rainy day. Have an emergency fund. Not need to use my retirement as a savings account clear from collectors. Take a lower paying job to get a better one in the near future. I can’t wait, yet know I must for another two months. Two months of three, to get all organized and the tax refund spent, once providers get their paperwork out so I can file.


                    • #11
                      Maria, thank you so much for your post! I can tell you, I"m already feeling a sense of relief, and I haven't even filed yet. I'm absolutely exhausted by all of it. I've always had excellent credit and paid my bills on time. My WHOLE life. To know I'm going to be walking away from a business I built from scratch while also forfeiting my responsibilities REALLY hurts. The emotional and mental hit is almost worse than the financial one.

                      THANK YOU for the great ideas about opportunities! I am indeed still in Cali. Everyone is telling me the same thing. I have another friend who worked in human resources at a huge corporation (now retired) who said he's going to look over my resume and get it in tip-top shape for all my skills. I'm starting to have hope. And the thought that someone can just ask me to do a job, I do it, go home and don't have to think about it again (holidays! Weekends! Vacations!!!) THRILLS me to no end. I'm TIRED.

                      So you haven't filed yet either? At this point, I'm just socking away money. Instead of paying my vendors and leaving myself with nothing to try to keep this thing afloat, I'm keeping it. It hasn't been long enough yet for the creditors to start realizing they aren't going to get paid, but it won't be long now. I dread the phone calls, emails and letters that are no doubt coming. The one I'm terrified of is the Amazon loan. I'm actually going to make a separate post for that to see what others think.

                      Keep me posted. Would love to know how you're faring, and I'll do the same!


                      • #12
                        My advice is that the moment you realize that your business is unprofitable, and will never again become profitable--which has already happened--is the moment you should cut your losses and move on. In other words, do not throw good money after bad, do not feel bad about "stiffing" Amazon out of the money which they lent to you. As you have correctly pointed out, your Amazon account will likely be terminated, but since you're losing money on that venue, who cares?

                        You should also stop paying your PayPal line of credit, and any other unsecured debts at this time. This includes the credit card which was assigned to you in the divorce. As this is not considered "domestic support", you can discharge this debt when you eventually file.

                        Even if you default on your PayPal line of credit, PayPal will not terminate your seller account, nor will Ebay terminate your seller account. Therefore, to the extent that you still possess saleable merchandise which can be sold for at least enough to cover your Ebay fees, PayPal fees, packing and shipping costs, and leave you with something left over to justify the effort, you should try to sell off that stuff there.

                        You should NOT attempt to cash in your stock holdings, and certainly should NOT even think about using that money to keep your online business afloat. As you have correctly pointed out, those funds are exempt in Chapter 7 bankruptcy, and you NEED that money for your future.


                        • #13
                          Stock holdings in retirement accounts are protected. Stock as in business merchandise to sell may not be protected. Action timing to make retirement account deposits can be limited. I suggest the original poster become familiar with California's exemption laws then prepare to file properly so as to come out of the other side with a place to live, a usable car (20 year old, must be lucky, especially in CA!), and a retirement fund untouched by "Hail Mary" moves in an attempt to keep a sinking business afloat, and the other things recommended by the stickie posts in this forum.

                          Most importantly, are the taxes current? The CA FTB continues to accrue busines license charges each year until a business is shut down, if it was ever registered, same with their Sales Tax division, and, if fully self employed, their EDD division.

                          Try to keep the process as much "just business" as possible. Grieve as needed, it's normal, but when dealing with folks, keep it just business. Make good use of your voicemail. Just because someone calls doesn't mean you have to answer. Strategically decide what to say, when, to let vendors know not to expect further orders, if any. Unsecured creditors are wimps, they can't take anything easily, and filing for bankruptcy protection makes it much harder for them. If you're filing before late payments really rack up, you probably won't even have collection agencies calling.

                          I do feel for my creditors, but they made a business decision to risk money on me, charging me interest that compensates them for their risk. The medical professionals, I feel more acutely, as the doctors and nurses worked hard for me, mostly, but their billing departments screwing up medical billing, that I am finished fighting.

                          On another note, most businesses fail in their first five years, to have made it 20 is simply awesome. Give yourself a pat on the back for that. You could close the business and after everything has settled, open another one with a different email address and with set hours, such as "all weekend purchases shipped Monday" thus giving yourself weekends off. Or, instead of trading hours for dollars, write a book or ten about your experience and what you've learned. My books make a small dribble, and if I can ever get healthy enough, I think I could open the book sales spigot a bit more. Being ebooks, I have zero inventory. Amazon et all control the flow of electrons, sending me electronic money and I can even be selling titles while sleeping, or recovering, or, in one event, the new title press release went out while I was in the ICU, and not as a visitor.

                          Also keep in mind, many self-made millionaires have a bankruptcy in their past. They risked all, some several times, before they found the idea or business that clicked. Bankruptcy is not the end, it is a fresh beginning, although with exemptions, a fresh beginning with a head start.


                          • #14
                            Originally posted by lillymarlene View Post
                            Trevor, thank you. That AT&T link looks great. Only problem as with most of the jobs in my area of Massachusetts, they are part time. I presently just started a full time job, was told there was overtime, but now there isn't any. I'm second shift but just requested to be moved to first. If there's no OT I'll have to find a second job to survive.
                            Lilly, I also live in MA, have a great full-time job that pays well, but have a second and third job, because I'm divorced, two kids, high COL area and no child support.

                            Honestly, the bankruptcy was the best thing that ever happened to me. I'm much better off financially than I was and I can sleep at night.


                            • #15
                              Hi Barbie---You won't lose your Ebay or Amazon seller account. You also won't lose your paypal account or paypal credit. If you need more information you can message me. Too much to type here. But I just went through all of this and can provide you better insight on what I did with my business after I filed chap 13.


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