Author Topic: Closing and Opening Small Own Business Due to BK 7 Filing  (Read 1312 times)

0 Members and 1 Guest are viewing this topic.

Barrely_Hanging_On

  • Valued Member
  • Posts: 58
Closing and Opening Small Own Business Due to BK 7 Filing
« on: October 25, 2011 09:54:18 PM »
We are about to start our CH 7 BK process. The attorney told us that we qualify for CH 7 BK.

I have a small, modest consulting business that I operate from my home office. The business has about $8K in CC debt. The business currently has about $500.00+/- in accounts receivable. The payments could arrive at any time. Do I have to surrender the account receivables payments that are due to be received? I am assuming so. Is there a way that I can keep them legally to help us meet upcoming expenses? I have though about telling the people that owe me the money to hold it until the business is changed and I can send them new billing statements.

The attorney told me to close the business and open it later, but we did not discuss that in depth. Since November is going to start next week, I am thinking about closing it on October 31, but I am not sure of when can I open it again. I have thought about opening it within the first three days of November, with a different name of course, or should I wait until the BK is discharged? My question is, how soon can I open it? We will meet again with the attorney during the middle of next week.

For a small amount of work that I am currently doing  I think that it will be best to not send any billing statements until the new business & name are active and everything is in place.

Your assistance is going to be greatly appreciated.

Fighting Irish

  • Valued Member
  • Posts: 1988
Re: Closing and Opening Small Own Business Due to BK 7 Filing
« Reply #1 on: October 26, 2011 02:22:51 PM »
What is the likelihood that you will have additional revenue being generated in the next few weeks?

If it's low, then you would be safest to close the business till after the discharge, and let your current customers know that they have a month's extra time to pay what you are owed.
Dang it, Jim! I'm a nurse, not an attorney!

(The rest of you, keep that in mind, too.)

missmuffin

  • Valued Member
  • Posts: 411
Re: Closing and Opening Small Own Business Due to BK 7 Filing
« Reply #2 on: October 26, 2011 03:39:23 PM »
I do not understand the rationale about closing the business during the CH 7 proceedings, and re-opening anew after BK. What entity is your business? Are you sole proprietor?

I am self-employed, own a business, am sole proprietor, and filed BK 7 in February. All my assets and income to include my business income were fully documented and disclosed. My debt was discharged in May.

It was not an issue that my income came from self-employment.
« Last Edit: October 26, 2011 05:33:53 PM by missmuffin »
I tend to spend my life with wishful thinking, daydreaming, or with being naive beyond belief. Assume it's the same here in this forum.

trick

  • Valued Member
  • Posts: 320
Re: Closing and Opening Small Own Business Due to BK 7 Filing
« Reply #3 on: October 26, 2011 04:05:55 PM »
I have filed BK in the past and am currently in discussion about doing it again.  Do not hide any assets! Do not hide any receivables! Be totally honest its not worth the headache to anger a bk Judge or the trustee.  If they find that you did not disclose assets it can lead to reopening and recision of the discharge.

Get advise from a BK Attorney, the day after you file the 7 you can restart your business anew with new checking accounts etc.  Do not despair filing a BK no longer has the same stigma that it use to hold and in fact the United States is about to join you :)

flacorps

  • Valued Member
  • Posts: 933
  • Author of Debt Hope in Trade Paperback
    • Learn to Solve Your Own Debt Problems
Re: Closing and Opening Small Own Business Due to BK 7 Filing
« Reply #4 on: October 26, 2011 04:06:47 PM »
1. You're talking about engaging in bankruptcy fraud.
2. Your clients will have no legal duty to pay the new entity. In fact, their legal duty will be to pay the bankruptcy estate, and they would be complicit in the fraud if they paid your new entity instead of the BK estate, which would only fail to invoice them for the money due to your fraudulent misrepresentations to the trustee.

This is where people get themselves in trouble. If you want federal protection, you have to put up with federal intrusion. If you thwart federal intrusion, you court federal wrath.
"History has taught us that weakness is provocative. To the extent that people see an area of weakness, they will take advantage of it..." - Donald Rumsfeld

http://www.myhopeseries.com

missmuffin

  • Valued Member
  • Posts: 411
Re: Closing and Opening Small Own Business Due to BK 7 Filing
« Reply #5 on: October 26, 2011 05:28:11 PM »
1. You're talking about engaging in bankruptcy fraud.
2. Your clients will have no legal duty to pay the new entity. In fact, their legal duty will be to pay the bankruptcy estate, and they would be complicit in the fraud if they paid your new entity instead of the BK estate, which would only fail to invoice them for the money due to your fraudulent misrepresentations to the trustee.

This is where people get themselves in trouble. If you want federal protection, you have to put up with federal intrusion. If you thwart federal intrusion, you court federal wrath.

This!
I tend to spend my life with wishful thinking, daydreaming, or with being naive beyond belief. Assume it's the same here in this forum.

Barrely_Hanging_On

  • Valued Member
  • Posts: 58
Re: Closing and Opening Small Own Business Due to BK 7 Filing
« Reply #6 on: October 27, 2011 11:43:33 PM »
Hi Y'all! Thank for your replies.

My business is a small and modest consulting business. Last year I did not have any work. This year I have had a very small amount of work. Our household income is primarily from a job that I have at nights. The consulting income is minimal; two, three or even four months can pass by without receiving a payment. I am a sole proprietor on the consulting business.

Our attorney suggested to close it so that the credit card debts could be passed to our personal debts and they can be included in the BK. Like another person suggested, the most advisable thing to do is to close it down, which I plan on doing at the end of the month, and open it once that the BK is discharged.

In regard to the small amount of accounts receivable that are currently pending I plan on reporting them so that we can avoid having problems. We want to have a quick and smooth BK process. It is not worth it to have problems with the government over a few hundred dollars. That's it for now, I'll keep you posted.