I have done this as a living for 7 years as my sole income , since I am physically unable to work a full time job elsewhere . I am wondering of part or all of this can be classified as tools of the trade , therefore exempting it from seizure . I ave no other assets , no equity in my home and have lost / sold all my belongings . I have an underwater home as well .
If you file a chapter 7, your ownership interest in the LLC will be considered an asset, subject only to the $5000 wildcard exemption. Therefore, there is a good chance the trustee would look to take anything over that. Tools of the trade would only apply to the computer, printer, etc. Since your comments to others indicated that this is not an ERISA retirement account, you would not be able to apply the retirement account exemption. However, there may some solutions you could come up with with a little pre-bankruptcy planning. You need to sit down with someone who handles more complicated cases and is willing to give you more than just a short consultation so that you can explore where you want to get and how to get there without acting in bad faith as to your creditors. Also, since you have a second mortgage, you may want to explore the possibility of a chapter 13 to strip the second mortgage and pay a dividend to unsecured creditors over time so that you do not lose the money in the account.
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That is an interesting argument. Perhaps if you could show that you cannot withdraw the funds without a substantial penalty, or that the account requires a minimum balance to remain open, you might be able to protect some of the money. The Trustee stands in your position so if s/he will incur a penalty to withdraw your funds, you could argue that should not count towards the total amount of your nonexempt assets.
Set up a consultation with a local bankruptcy attorney. That person can advise you how best to protect your assets through bankruptcy.
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