There are several ways to commingle funds. The first way to commingling funds is sharing bank accounts with a non-filer. Generally, its best to keep all bank accounts separate and have all your income and expenses going out of one checking account.
Otherwise, it could be perceived by the trustee, as a gift if any money is going into someone else’s bank account. The second way to co-mingle funds is to keep your business income and personal income in the same checking account.
It is always best if you operate a business to keep all income and expenses of the business coming out of a designated, separate bank account. Only transfer to the personal account your payroll or distributions to pay your personal expenses. The third way to commingle funds is to put money from a variety of sources into the same bank account.
It’s possible for different sources of income to have different exemptions. For example, wages from a job can be exempted up to 75%. Social security income is 100% exempt. Pension income, depending on the type, have different exemptions. Alimony has a separate exemption, as does VA disability.
Ideally, it is best to keep each in a separate account so it’s being exempted correctly when the bankruptcy petition is filed, and you are not commingling exempt funds with non-exempt funds. Another example is putting in a tax refund, or personal injury settlement, into the same account as wages.
In that case, that money might have to be spent down reasonably so we know the source of any money left in the account is wages that would be exempt. The lesson is to keep everything transparent and separate so it’s easy to see the source of the deposits and any expenses coming out of the account.
In today’s current market business owners are faced with numerous challenges from finding employees to drastically increased costs. They are faced with the question of whether they will be able to continue their business or whether it’s better to close it.
That is a very personal decision since so much goes into starting and sustaining a business. There are several factors we look at in making that determination.
Are there any business assets such a commercial building, inventory, or equipment that should be liquidated to pay your creditors? Your assets cannot be sold or transferred for your benefit at the expense of paying your creditors. Even transferring assets to a new business venture can disqualify you from filing bankruptcy so its very important to consult with an attorney before making any decisions on the proper steps to close your business. Another issue is whether the debt is exclusively in the business name, did you personally guarantee the business debt, or did you use your personal credit lines to fund your business?
In most cases, there is a personal guarantee on business debt and personal credit cards are used to keep the business afloat. If the majority of your debt, is non-consumer or business-related then you would qualify for a Chapter 7. Again, it is important to seek the advice of an attorney to determine which Chapter type you would qualify for under the bankruptcy code.
Many times, if the business has no assets and will be closed then it can just be administratively dissolved without the need to file for bankruptcy. Another issue also is whether there are any outstanding account receivables, do you reasonably expect payments in the future, or expect any reoccurring income? There is also a potential that that could be collectable by the trustee if you are filing a business bankruptcy.
All of these factors need to be considered whether determining whether to file a business bankruptcy or a personal Chapter 7 or 13 bankruptcy.