No Smoke & Mirrors, Just The Brutal Truth...

[SlidingDeeper]

I am 37, been married for 16 years, have 2 kids (11&9) and started my own business 15 years ago when I was 23.

Everything was going great until mid to end of last year. I lost a customer that was a core part of my business that brought in a consistant $500k a year. I picked up 3 large mid six figure jobs and thought that we were going to be ok.

Working up to being 90% finished on one of the large jobs the customer stopped paying their invoices. I fought the fight to no avail and after getting my attorney involved the customer fired us from the job and still hasn't paid us $120k.

Due to the fact that alot of my money was tied up in that job and I spent time chasing the money, we fell behind on another one of our large jobs due to lack of funds. Since we were behind this customer terminated our contract with us and went elsewhere.

In the meantime things have gotten tighter and tighter. At first we were behind on our house 4 months and got caught up using our retirement fund. We cycled thru 4 or 5 months again and to get caught up are making double house payments with this month being the last and we should be caught up again. My wifes car was repoed once which we got back and then when we were behind 2 months they came and got it again early. They want the enitre balance amount owed for us to get it back but good luck on that.

The business right now has about $250k in debt, we owe $400k on our house which is now worthless. We have no credit card debt but are struggleing to make ends meet. No health insurance, none for the kids, no pool service, no gardner, soon no cable or trash, no extras period.

I am owed money from other customers but since things have tightened up with the economy they are slow paying which makes me behind on bills at the business as well.

My situation started from not getting paid on a job which balloned into the overall bad situation. And with my other money being tied upon other jobs i am not being able to get any of them completed.

I want to continue to move forward but the pressure is really getting to me with me not being able to man up and pay things as needed with more and more customers not paying me.

I have enough business right now and can get plenty more but I have no funds to do the work.

If I walk from the business I'm afraid I won't be able to find a job making enough to pay my bills. If I walk from my house I will never be able to replace it in this lifetime with what we have, but if I continue this way I might loose everything anyways.

What do I do ???

What is involved in bankruptcy? Do I bankrupt the business or personal or both?

I have no idea...

[rfassett]

Well, you have come to the right place to find a wealth of information. Search the forum with your specific questions. It sounds to me like you have little to no unsecured debt, so Chapter 7 bankruptcy may not be an option. Chapter 13 may work to your advantage simply to get the automatic stay. Those comments are on the personal side. What entity form does you business have? It makes a difference.

[Flamingo]

Since you have both business and personal situations going on at the same time, you truly need good legal counsel and one that handles businesses. I suggest obtaining consultations with a few to find out exactly where you stand so you know how to proceed or what to do. If you know of no attorneys personally or have an attorney who has been involved with any of your business dealings, contact your State Bar Association (look in the State section of your phone book), call them and advise you are seeking references to a BK attorney who handles businesses. Most BK attorneys give free initial consultations. Call and make an appointment. That is the best advice anyone can give you at this point so you can give yourself a perspective on your total situation as to finances and your state laws.

[AngelinaCatHub]

It seems you could get a mechanic’s lien on the work not paid. Can the materials not used on site be picked up? You could sue him but that takes money too, but you have a lot of money in materials on that job.

I know the housing market is in the hole, but if you can get an equity loan on your house, after all, if you are loosing it anyway, if there is a chance to recover the business, you may have a chance to recover all.

I have see some businesses give a discount of accounts receivables if the customer pays the whole thing right away.

If they are slow pay due to the economy, your business whatever it is, may be an unnecessary expense seen in many eyes.

A 400K house? Worthless? It has to be a nice house. How is the market were you are at? Perhaps a sale to hold up the business? I am sure you have thought all of these things yourself. Just going over what I would attempt. ‘Hub

[Minnymouth]

Do go ahead and place a mechanics lien on the people who do owe you and have them in place. The trustee will go after them...... you won't have too if you file for bankruptcy. Believe me, they'll pay the Trustee,, lol. This will also prevent the parties from "selling" anything that you have a lien against until the lien you hold is settled. Example.... if you did plumbing in a new house for a contractor, and he refused to pay you.... they can't take out a loan, or sell that house until the lien you hold is settled and paid.

[Frogge]

Welcome, Sliding. You will find a LOT of good info here. This forum is a lifesaver for sure... I agree with the comments about the mechanic's lien, this is a powerful tool. Also as mentioned you should check out the Ch13 board, I think there's a couple people on there with similar situations to yours.

[BKOnce]

The answer depends on the written contract between you and him (if any), and the mechanic liens law (requirements like timing) in your state:

1. Does contract allow you to get initial deposit (how many percentage%??) from him BEFORE start? How many times? your work schedules? your deadlines met... and have you get to finish any any stage yet? Have you spent any their money$ on project yet??

2. Does your contract requires you to perform/finish any work AFTER you get that deposit and ask for another yet?... or not yet??

3. Does your contract allow you to break or walk away... in case of you have mo money$$ left or stop performing work...and still... NOT BREACH of contractual terms with him?

4. Does your contract requires you to ARBITRATE (not go to court) first and/or mediate first with him for any issues?

5. and... many more... so on... etc.

So, read carefully and decide accordingly...

[AngelinaCatHub]

He needs to act in a timely way. Like NOW! Whatever your state is, go to their Statutes. Or Google mechanics liens (your state code like FL is Florida) and you will have plenty of insite. A letter would be required if not already done, demanding payment or reason why. I'm hoping to keep you from BK, but the above is right about listing them as a potential asset. 'Hub