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  1. #1
    Join Date
    Apr 2011
    Posts
    8

    Default Income Earned After Filing Chapter 7

    My question involves bankruptcy in the state of: Arizona

    I own an s-corp, no assets, service company with no contracts, no account receivables basically nothing. Just do the job, get paid. The only asset I could think would actually be an asset of the s corp, the corp. checking account. How does that work after the filing date? Are the income earnings exempt after the filing date? My attorney, says they are but because I was over the exemption on filing date, I will have to turn over that non exempt portion to trustee but nothing more. Something in my gut tells me this isn't correct. Can anyone tell me how this works? Will I loose all the money in there now? This is the only source I can withdraw from for pay, to pay my living expenses. Also, what is considered stock? I do not have stock, or at least I do not think I do.

  2. #2
    Join Date
    Sep 2010
    Posts
    478

    Default Re: Income Earned After Filing Chapter 7

    You say you were over the exemption on the filing date. Was this $$ sitting in your personal bank account ($150 exemption - $300 if married) or was it sitting in the corproate bank account ($0 exemption)?

    The 7 Trustee is going to investigate to determine if the stock in your corporation has any value - in other words, can he sell the stock to someone. Typically you value an entity based upon: If all entity assets were sold would there be enough to pay all entity debt including any long term leases?

    You have a service business. Since the Trustee cannot force you not to complete against the entity, he is unlikely to try to sell it however, while YOUR post petition earnings are not property of the estate, stockpiling $$ in the entity account when you no longer own the entity is not a smart move.

    Des.

  3. #3
    Join Date
    Apr 2011
    Posts
    8

    Default Re: Income Earned After Filing Chapter 7

    Thank you. However, I maybe confused still. So, basically, I am working, putting money in and paying for things thru the corp account ( in the ordinary course of business) and only writting myself a check to cover my living expenses, this is not okay? In other words, illegal on my part? I know trustee owns all assets until abandon but what do I do to continue to make money? There is a decent amount in there now, not large but over 5k, only because I did not have to take any money out in prior month for pay because i already spent down to pay forward mort. And utilities, food. I was over in the Corp, you say 0 exemption, I do not understand. I have been prepared to turn over those funds, since the
    day I filed. Attorney says make offer cause it would be easier and less expensive if I am willing to turn over. I guess, i should just take my chances and stop working, if in the end I will be emptied out, and not able to pay my bills.

    I filed personal chap 7
    No business debt
    So my interest in the Corp is the stock? I'm sorry for asking so much, just do not understand. Did I choose the wrong attorney?
    Also, the Corp isn't worth anything. People call for my service, without me, worthless. Unless, one would be interested in the name?

  4. #4
    Join Date
    Sep 2010
    Posts
    478

    Default Re: Income Earned After Filing Chapter 7

    You did not choose the wrong attny. You just need to sit down with him and get a better understanding. The problem I have is that you are operating under the old entity that no longer belongs to you. Does it matter? Probably not, especially since it is a service business.

    The cleaner way to have done this would have been to start a new entity the day after you filed and write all new business under the new entity or simply operate as a sole proprietor and not utilize the corporate account. Another avenue is to ask the Trustee to abandon the current entity. An abandonment returns the entity to you. These two options are routinely used by debtors we represent.

    I cannot comment on your specifics. Call the attny tomorrow and set up an appointment to discuss your concerns and confusion. In the meantime, don't lose sleep over it.

    Des.

  5. #5
    Join Date
    Apr 2011
    Posts
    8

    Default Re: Income Earned After Filing Chapter 7

    I will do that . Thank you for your advice. I might ask my attorney to do suggestion number two.
    I appreciate all your help.

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