Pre Chapter 7 Business and Personal

[LifeSAVERS]

Due to some unavoidable and mounting circumstances (and lots of tears), I find myself now looking at filing Chapter 7 (assuming qualified).

Business -Sales down

 - PayPal working capital loan for eBay business $23,000 (10% of sales) 

 - KB loan for eBay business $12,000 ($3,800/month) last payment and advance on 11/21/2015

Personal - income decrease, medical for son and college expenses for son (1st year) - post-secondary CS Mod attorney fees

 - Medical - unexpected $5500 orthodontist to continue treatment across country for son in college

 - Credit card debt over $49,000

 - SL $8,800 ($121/month)

I have been running a cycle of paying a credit card, than using those available to payoff the next card.  Expected sales to increase due to increase in listings, but the influx of sellers in China (increase of over 100,000 items flooding my selling category now) and the search algorithm changed again in eBay earlier this year, my items are not moving as they have historically.

I  have stopped charges this month on all of the credit cards, and have not missed a payment on any at this point.  The only late payments on my CRs is from 08/2012 for CapOne Auto lease.  Score (myFico) is currently around 645 on each CRA, as my balances are all pretty close to max and the CapOne late payments.

My biggest concern right now is the KB loan, as others have stated that they will attempt a payment from your Paypal and if funds are not available, will try repeat echecks from your bank account, causing OD fees until you close it.  Stop payments do not work, as they have reportedly changed the amounts to bypass that issue for them. 

QUESTIONS:

1. Has anybody gone into file with a Chapter 7 for a business (S Corp) and personal at the same time and how that works.  Should I expect to have to pay double the attorney fees with 2 different entities, or is it all wrapped into one typically?
2. Kabbage or PayPal Business Account in a Chapter 7 bankruptcy - Any issues?
3. If you had an eBay account/store did they close your account after filing? (eBay is my only source of income)
4. If you had a PayPal account did they close your account due to Bankruptcy?
5. Does the 90 day rule apply to Kabbage loan deposited directly to PayPal business account?

Planning to meet with a bankruptcy attorney after the final CS Mod for post-secondary. Should know more of when the possibility of that is, after meeting with CS Mod attorney this week.

Thank you in advance for your time to read the above and for any insight/experience you might wish to share.

[Anonymous]

Good luck to you on your journey. I know it is a difficult time and decision to make.

As far as your questions, Paypal is the only one I've had experience with. I had a regular Paypal account and it was not affected by my BK. I didn't have any credit programs through them however, so the fact that you do may change how the work with you.

Good luck!

[LifeSAVERS]

Thank you for your kind words!  Yes it is very difficult to come to this decision, have been trying not to take those steps for the past 4 months, but hoping doesn't make it happen.  I can honestly say I have done my best and just do not see another option.

 I currently have both the working capital loan and an Extra Mastercard with PayPal.  That may be an issue for them, will have to see once the dust settles.

[despritfreya]

franzschubert wrote:

Has anybody gone into file with a Chapter 7 for a business (S Corp) and personal at the same time and how that works. Should I expect to have to pay double the attorney fees with 2 different entities, or is it all wrapped into one typically?

Since corporations do not get discharges in a Chapter 7 there is little (if any) utility to putting the entity into a bk. Typically, the individual (that’s you) files bk and lists any personal gurarantees there might be as it relates to corporate debt.

franzschubert wrote:

Kabbage or PayPal Business Account in a Chapter 7 bankruptcy - Any issues?

Not sure what you are asking.

I assume these two lenders are no different from any other lender. Assuming no non-dischargeability complaints, if the obligations are unsecured, the debts will be discharged in your individual case. If either lender has collateral, while the debts will be discharged, the liens will survive.

If the obligations are owed by the corporation the lenders have the right to sue the entity but, assuming the entity is "dead", what’s the point - let the creditor sue.  Good luck collecting from the "dead" corporation.

franzschubert wrote:

Does the 90 day rule apply to Kabbage loan deposited directly to PayPal business account?

Again, not sure what you are asking. 

If dealing with a corporate debt and the corp files bk, the preference amount is $6,225.00 in the 90 day period. If the corporation has paid such amounts to any unsecured creditor the $$ is recoverable by the bk trustee. 

If dealing with your individual case and your debts are primarily consumer debts, the preference amount will be $600.00 or more within the 90 days.  If your debts are not primarily consumer in nature the preference amount increases to $6,225.00.

Des.

[kaybean22]

I'm dealing with a similar thing with Kabbage -- took out about 4k in November and will like be filing Ch7 in December. 

I linked up my PayPal but they deposited money into my checking account. I ended up closing that account (For this reason, and others to prevent automatic payments coming out of it). I just checked my PayPal account, and there's no apparent connection to Kabbage with it -- but I changed my password just in case. 

You might also want to see if you have a preapproved payment plan:

In PayPal, go to my profile>>My Money>>click update beside my preapproved payments>> Then click on the preapproved payment plans link at the top>> then select anything that says kabbage and click cancel.

You can also call their support number and ask to unlink all your accounts if all else fails.

I'm meeting with my attorney today. Will be interesting to see if this is dischargeable or not. I should have never taken this loan out, but with preferential payments, I can't pay it back even if I could. 

[LifeSAVERS]

kaybean22 Thank you and I am sorry to hear you are going through the same thing!  Good luck with your attorney tomorrow and if you wouldn't mind posting back here or private message me if you prefer, with what they say.

I am meeting with CS Mod attorney myself in the morning (first meeting, as I have been handling it myself, but way over my head with his attorney drowning me in document requests and now suggesting that I pay his attorney fees). I will know once this meeting is over what I am going to do next, besides at $325 an hour will most definitely motivate me to move quickly.  This has me all bound up in knots, as it is so personal, and because it is about and for our son, a lot harder to process.  

However, the bankruptcy is about poor business and personal financial choices, hard lessons learned, and I accept full responsibility for that.