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

Chapters

• 1:03 Filing for Chapter 7 bankruptcy
• 2:41 Assets, documentation, and next steps
• 5:46 Answering key questions and concerns
• 8:24 Blindsiding news and emotional impact
• 9:45 Looking toward a debt-free future

Transcript

Speaker 1: 0:32

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, 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: 1:23

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: 2:36

And so now, like we can qualify for an overnight debt forgiveness like 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: 3:13

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: 3:45

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: 4:35

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

Speaker 1: 5:53

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: 6:34

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: 7:07

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: 7:40

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

Speaker 1: 8:31

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: 8:48

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. That's rock and roll.