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Filing BK next month with a Single Member LLC


shotgun7
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Thinking seriously about taking the plunge next month, My wife met with a lawyer the other day but something came up and I was unable to attend. they didn't go into much detail but she did mention we had a business he said we could do chap 7 but here is a basic outline, and a few questions

 

Household Size 4

 

around 25-30k CC debt (defaulted)

around 10,000 on a buy here pay here car worth half that (current)

around 2000 medical bills (defaulted)

57000 mortgage on house, worth about 62-65k

 

Will be using Federal Exemptions

 

Monthly Income around 2700 (Gross) from full time job sometimes a few hundred more/less with OT and Holiday pay.

 

Business income

Gross 6 month income $22000 ( 5 months, plus projecting next months revenue since we wont file till then)

Expenses

$6900 pay to sales person/consultant

$3000 Mileage write off per IRS allowance

$210 software

$450 office supplies (paper, ink, supplies etc)

$426 Cell phones (aprox 40% of monthly bill)

$450 Landline/Internet ($50% of bill)

Total $11436     (maybe something I am forgetting but this is real close)

Net 6 month profit $10564

 

Note, Taxes/Income are handled as a Sole Prop since it is a Single Member LLC

 

Nolo says for my situation total 6 month income must be less than $29594

 

So the way I have it figured, I will have a 6 month income of $26764 However, that is not including the $7500 tax refund me and my wife got in March...Of course, that money is long gone now, spent mainly on necessities and bills and 1 project for the home. but we really didn't keep any receipts either.

 

The other hitch is, the sales/consultant payment is to my Dad, however, it is all on the up and up. It was reported on my taxes last year, and he was sent a 1099 and the same will be done this year. He had 30 years exp in the same field, and was laid off and decided to work with me and semi retire.

 

First off, how close are they going to review my P/L statement. Again, I really don't keep a lot of receipts but I can prove most of it on paper. I mean, I am not trying to be shady, but I don't want to go in with a simple 1 page P/L statement and end up getting thrown into chap 13 because of something stupid. But I don't want to go in with 150 pages of non sense if they only need a simple P/L.

 

Second question is about the car, the warranty is about out on it, and is a decent car (has some issues) but we still owe 2.5 years on it, and I don't want to reaffirm it but, would be willing to keep paying it. Is it likely they would repo the car if I kept making payments? We have 2 other vehicles but they are old and not in the best of shape and I am not sure they would hold up to daily driving, they would both have to have a set of tires, plus some other minor work. But, also we have another kid on the way due around the 1st of the year. which is the only reason for considering keeping the newer car.

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If its a true LLC...in other words, registered with your state and the IRS as a corporation...it could get really complicated.  You might think of yourself as a sole prop, but the government (including the IRS) might think of the LLC as a separate "person".

 

You probably want details from a lawyer.

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