363. WE GOT CHAPTER 7, just got 5 years younger and thousands cheaper

Transcript

Speaker 1 0:01

Woo , all right . Well , happy Friday , caught up with the attorney and , long story short , we're going to be able to file chapter seven . So the gist of it we are I won't go into like our entire personal finances and business finances , but just to keep it simple . So I have a very above median income and so between the two types of bankruptcy there's chapter 7 and chapter 13 . The basic difference is chapter 7 overnight , if the court says yes ,

Filing for Chapter 7 bankruptcy

Speaker 1 0:32

you are instantly debt free . Now , if you have some stuff that are like luxurious or like bougie , you can't hang on to them . So , like I have some sport cards , I have some firearms , I have some cash , and so some of those will be surrendered to the trustee , they'll get sold and that'll help pay off some of the debts .

Speaker 1 0:52

The alternative is a chapter 13 . That's where you keep all of your assets and your liabilities , but for the next five years maybe three you make a monthly payment to your creditor account . That's not enough to cover all the debt , but it's at make a monthly payment to your creditor account . That's not enough to cover all the debt , but it's at least a good size debt amount . And after five years you hit your , your limit , whatever , and now you're done paying off your debts . Uh , when you're like at the median income or below , you usually qualify for seven . If you make a big income , you qualify for 13 . Well , I'm above median , so I would normally qualify for 13 . However , the business losses over 50% of a combination of business losses , as well as the business debt , is far higher than my personal debt . So we're other than , like our mortgage and a little bit of student loans . We're debt free , so we don't have a whole lot of debt personally . Um , and so our business debt altogether is much higher than our personal debt altogether . So because of that , we can't . The gist of it is we automatically end up in the chapter seven option because we can't qualify for 13 . You end up in seven .

Speaker 1 2:05

And so now , like we can qualify for an overnight debt forgiveness like

Assets, documentation, and next steps

Speaker 1 2:10

it's not going to be cheap . Like we pay our attorney's fees , filing fees , we're going to write a check because we have some assets that we're not allowed to keep . It's like we have a lot of cash . We can't keep all the cash , we can just keep a little cash . So a lot of that lot cash will go to a trustee , um , like some memorabilia , some like personal possessions that are valuable . Those will get taken and liquidated to pay off the debt to the trustee . But it will be debt free . We won't owe the landlord the sba , the seller finance note , like it's gone .

Speaker 1 2:42

It's gonna gone and like this uncertainty I've had for a month , it's now certain , like it's going to be over really fast . And I thought I was going to be almost 40 by the time this was behind us and it's going to be like quick . Our credit score is still going to take a ding , it's still going to show bankruptcy , delinquency , whatever . But it's not the end of the world . It's going to be that way . Whether we do a overnight option or a five-year option , we still get dinged either way . So I am stoked . I cannot believe it .

Speaker 1 3:14

Now what we do is the attorney basically sends us like a super detailed Word document and Excel sheet . It's basically confirming yes , this is everything that I own , yes , this is every debt that I owe , and it's because it's a federal thing that you apply for so you can't lie . If they find out that you lie , like they can take you to jail . Like it's you don't want to do that . You got to tell the truth upfront . Um , that gets a no brainer . And so all that to say , uh , we now like document , a super detailed document of our assets and our liabilities . Uh , we then submit it to the courts . A judge says , yes , this looks fine or no , this looks terrible . And then , um , and then we're done , so we could file as early as like a week or two from now , which is lightning fast .

Speaker 1 4:04

That's gonna be kind of crazy , um , so , yeah , I I don't know what to say I just arrived and , uh , now we're just hanging tight . So so I just arrived for a pickup after school , um , but like it's gonna be over with and done with . So , um , yeah , can't really work the side hustle so much right now , can't do a whole lot of bonus things , so we're just going to hang tight and just wait for the applications . And so , uh , we still have to do the , we still have to engage , like normal business . So , um , the bank called me again today that's the second time this week Like , hey , nathan , how's it going ? Let's catch up on the phone Talk soon . They did that . I haven't called them back yet , but like , we're going to do the member event this Saturday . We're going to do a nutrition thing on Sunday , like we're going to do business as normal and it sounds bad , but there might just be like a blindside moment where it's like all right , the business is now closed and then it's up to the landlord

Answering key questions and concerns

Speaker 1 5:15

and other folks Forget to keep it going . Wonderful , thank you , appreciate it , and then it'll be that .

Speaker 1 5:22

So I really , really , really want to give our members a 30-day heads up . I don't know if that's going to happen . Uh , from what it looks like it's going to be just like an overnight decision from the courts and now I , and then , like within a blink of an eye , I will not owe the bank or the landlord a dollar , and so they'll take want to take possession of those things and start liquidating them and be made whole and get a paying person back into their coffers and they'll probably shut the business down really fast . They'll probably liquidate inventory really quickly . I don't know . So , yeah , I just need to wait and tell . What do I do ?

Speaker 1 6:03

So I talked to the lender , the two big things we were curious about do we tell vendors about what we're doing ? Answer was nope . There's nothing to announce other than we're filing an application with the state . That's just gonna cause concern and panic for everyone . No , not today . I asked him about buying my wife a replacement vehicle . Her car is breaking down . It smells like burnt rubber . It is on the edge of its life . He said nope , nope , hang on . Let's wait like 30 days till the the proceedings are done and then go buy a vehicle . Your credit will rebuild . Cool , I can do that .

Speaker 1 6:36

Ask about side hustles . Uh , the photo booth thing . Should I ? Can I do that ? Can I have a little like pocket cash ? Should I stop that right now and wait a little while ? He said Nope , hang tight , wait till 30 days after the verdict and then feel free to go do what you want . So I want to have my time back . I want to have my life back . I also want to just be able to afford our , our simple life , and so I , right now , I feel like I need to work a second job to do that , but I don't know if that's real or perceived . So , anyhow , those are the side questions that I had .

Speaker 1 7:09

Um , the next few weeks are going to feel like I'm blindsiding everyone out of nowhere , and I guess I am . I guess I'm surprising people with news that I'm surprised by having , and so taking that out of context is not allowed . Yes , as everyone , I believe , will feel blindsided by this . I am also blindsided by all of this . So nobody saw this coming from a mile away , other than the seller who sold the business , and there were thousands of dollars of losses when they reported that there were thousands of dollars of gains . So that's the only person who ought not be blind , blindsided by all of this . Um , yeah , I have to call it because my phone

Blindsiding news and emotional impact

Speaker 1 7:53

is saying my , my phone is too close to my face . I need to go and reset some position of my phone .

Speaker 1 8:00

Uh , we're just gonna go enjoy our evening . It's family movie night , so we're watching a free movie . We're gonna learn to enjoy life on the cheap side , and I just got five years younger . Like the future that I was dreading has never gonna happen .

Speaker 1 8:17

So we're gonna enjoy this , we're gonna document this and , regardless of what the outcome is gonna be , it's easy now to say like , yep , god is good because it's a verdict that I wanted . So that's not a fair thing to assume , but I was hoping that if I got an unfavorable verdict , I would still say God is good because I do believe that and so , anyhow , um time to zip on home , time to enjoy life . We are going to do that and we are going gonna beat it free , maybe a month from now , so we'll talk the details later . Things like refunds , payroll taxes , franchisor unraveling , turning over of landlord keys , perishable inventory , like . There's been a lot of nuances here , so story is not over , but a big checkpoint has been reached , and reached it has been . We're going to document it . That's where . That's where we're going

Looking toward a debt-free future

Speaker 1 9:14

. That's rock and roll .