My question involves bankruptcy in the state of: MICHIGAN
The following is all HYPOTHETICAL. Let's call it a story for a book and i need good advice as to how to finish the story!.......
I have a wierd case... Wife and I want/needed to do chapter 7.
We have a house, old car, minor assets with the exception of a business (sales). It's our only means of support since I am on Unemployment.
Several years ago we opened the business (I did open the business, so I am the owner of the LLC). We never filed an operating agreement. When we did our taxes, one year my tax guy showed the owner of the company as my wife, next year as me. During the entire time we have owned the company, i never got paid for anything, she is the one that runs it, and is licensed to do so. She is the broker. All checks went to her (owner draws on a monthly basis, NOT for each sale).
We discussed bk with a lawyer and got them the information, going back and forth with them this took 7 months before they said they were ready! Gave them all my information and on the form they had me fill out, I told them I was the owner of the company. When they were finally ready I said let's do it. One small snag.. Our company had the best two months ever. We had 14k in the account. So when the lawyer asked how much the company was worth, we discussed and came to the conclusion there is no real value (jus some off furniture, no stock etc) and it must be worth what we have in the bank.
He kept telling me the whole time they can't touch a corporation, you will be fine.
Then when i wanted to file (since it took so long to file), he said why now? I said, it's been so long, can we do it. He said yes, but had to check on the business. After a few hours he said we can exempt the money from the business... I said, good, let's do it!
Now, two months after filing, my lawyer is now telling me that She is the owner and not me (since she is the broker, and I don't even worth there), I said whatever, but it's in my name, I don't care. They said, the trustee wants half of the money that was in the account since we can't exempt all of it since it's mine (the trustee changed his mind, after seeing paperwork).
My lawyer says we need to give them 7k! I only have 4 k left in my account, i didn't just spend it, it was monthly bills and expenses... It was a good couple months and we had to pay up our bills!
To top it all off, all sales since we went into bk are according to my lawyer now going to be taken by the trustee as well!
So now, I am in a dilemma... My lawyer is going to talk to the Trustee and try to work something out, but essentially, I am screwed for at least 7k! Not to mention the 4-5k of closings we had that we had to pay out to our agents (the company only makes a small pct of each closing by our agents)....
This all because my lawyer didn't think the trustee could take money from a business even though i am the only true owner. (We have always run it as both are owners, both on bank account, etc)
This is the same lawyer that had a puzzled look on his face when trustee said he wanted any money from closings since bk started.
Same lawyer that had a puzzled look on his face when trustee told us that we can't get rid of 2nd mortgage lien (was on paperwork as being included in discharged debts).
There are two lawyers in this firm, we are now working with the senior one, as it seems the first guy didn't have the experience to deal with this.
My question is simple (now that u know the background info):
Can I back out of BK, go back in now that my account is so much less than it was and save that 7 k? Considering is the trustee does want the full 7k, not to mention any money since, then we won't have enough and will have to either work out a payment arrangement or go out of business!
I don't mind paying my share, I feel horrible about the creditors we have left out to dry! Truly we do. Up until the time we realized we were over our head, we NEVER made a single late payment. When that time came, we had over 100k of open credit and could easily have kept using the credit, but we didn't. We stopped. It has taken 3 years to get to the point that we know we can't make up for the old debt and need a fresh start. We tried!
So I don't mind paying some, but we could lose our only source of income because my lawyer didn't know what he was doing..
What should we do? Stick with the guy and hope we make it without losing our business?
Thanks in advance!

