How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask cfortunato Your Own Question
cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
14232603
Type Your Bankruptcy Law Question Here...
cfortunato is online now
A new question is answered every 9 seconds

I recently lost my job and I am unemployed. I plan to file

This answer was rated:

I recently lost my job and I am unemployed. I plan to file for bankruptcy in 6 months when I qualify for Chapter 7 Bankruptcy. My question is can I sell non-exempt property now and purchase "Tools of the trade" for a new career. For example, I want to become a professional BBQ pitmaster (full time and not a hobby). I want to do BBQ competitions and food catering on the side. If I purchase a $30,000 portable BBQ pit with the proceeds of my non-exempt funds, could I exempt the new portable BBQ pit and my existing truck that has equity above my exemption limit for vehicles under "Tools of the trade". This would be a new small business for me for gainful employment after bankruptcy. I previously worked for Federal Service in health care. Thanks.

Terry

cfortunato :

Hi - my name is XXXXX XXXXX I'm a Bankruptcy and Consumer Protection attorney here to assist you.

cfortunato :

You are allowed to engage in 'pre-Bankruptcy planning' - which includes converting non-exempt assets into exempt assets.

cfortunato :

So there would be no problem purchasing tools of the trade with non-exempt assets.

cfortunato :

However, you would not be allowed to use the Tools of Trade exemption for your truck - for which you would be allowed to use only the $5,000 motor vehicle exemption.

Customer:

Purchasing tools of the trade for a new career is also ok as opposed to my previous career? What burden of proof is required for a new career?

cfortunato :

There is no requirement that the business be in existence for any length of time.

cfortunato :

The burden of proof would be minimal.

cfortunato :

Any evidence to show the BBQ is being used to make money (instead of for personal use) would be sufficient.

cfortunato :

Are you planning on forming a business (sole proprietorship, LLC, corporation, etc.)?

Customer:

Yes, eventually. Initially, I will be competing on the professional BBQ circuit for cash prizes.

Customer:

Any concerns or do I need to form a LLC first?

cfortunato :

Competing for prizes does not sound like a business.

cfortunato :

It would be better if an LLC was formed before a Bankruptcy was filed.

Competing for prizes - alone - would not be considered to be a business. If you sold food to the public, in addition to competing, that would be a legitimate business.

It would be better if an LLC was formed before a Bankruptcy is filed.

cfortunato and 3 other Bankruptcy Law Specialists are ready to help you