Does a loan from my company to me count as income in chapter 7 means test?

Asked over 1 year ago - Palm Harbor, FL

Our company loaned us money for 2 months last year (Nov & Dec). We have not yet paid it back or begun making payments on it.

We own about 66% of our C-Corp that made this loan to us. Do we have to count the loan as income on our means test?

Additional information

Thanks for the feedback guys. Unfortunately we can barely afford the filing fees let alone the attorney fees. That said, we don't treat our biz like a "cookie jar". We file taxes on time every year and engage in no co-mingling of funds, etc., etc. We cannot pull money from our company that we did not earn to pay the expense of the personal bk. The company is its own operation with other shareholders, etc., and we've already borrowed money as I've stated.

The loan is a fully documented note with interest, a payment schedule, etc. It is a loan per our corporate accountant. But I'm concerned that since we haven't begun making payments and that it was the only revenue we received personally for 2 months "opinion" might throw it out as a loan & try to call it income.

Attorney answers (3)

  1. Maxim Christopher Zawojski

    Contributor Level 11

    3

    Lawyers agree

    Answered . I agree that you need to hire an attorney. I have done a number of personal bankruptcies for small business owners and what you said in a few short sentences brings up a whole bunch of red flags. A loan is not income, but there is no guarantee that what you did was a loan or that it would look like one to the US Trustee. If you are discharging primarily business debt then there is no means test requirement anyway. Also keep in mind that if you treat your business like a cookie jar you are compromising the liability protections of your business.

  2. Paula Brown Sinclair

    Contributor Level 20

    2

    Lawyers agree

    Answered . Before you self-inflict irrevocable damage, let's examine your strategy. While the caring and knowledgeable attorneys of Avvo can provide accurate information about the law and legal procedure, this forum is ill-suited to managing the conduct of a specific case. You own a majority interest in a corporation and God only knows how many other issues that could become very costly in a bankruptcy. Very little is black and white in a bankruptcy, and there is no guarantee that you even now the right questions. Put another way, the bankruptcy process is amenable to planning opportunities. Nothing short of personalized advice and representation by experienced bankruptcy counsel will meet your needs.

    Bet wishes for a favorable outcome, and please remember to designate a best answer.

    This answer is offered as a public service for general information only and may not be relied upon as legal advice.
  3. Diane L Gruber

    Pro

    Contributor Level 18

    Answered . Interesting questions. I would say, yes, it is income. More signifcantly, WHY are you trying to handle a bankruptcy without an experienced attorney?

    Be sure to designate "best answer." If you live in Oregon, you may call me for more detailed advice, 503-650-9662.... more

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