Working for business owned by spouse and Bankruptcy.

July 14th, 2007 by Questions

I\’am presently employed in an incorporated business (restaurant) owned entirely by my wife. How will the fact that I have substantial influence over the timing of payments from the company to me affect me if I declare bankruptcy? Are there any steps that I should take prior to declaring bankruptcy to eliminate potential problems?


One Response to “Working for business owned by spouse and Bankruptcy.”

, A licensed trustee said:

You are asking the classic “substance over form” question. That is, the reality of your situation is such that you may be able to influence your income and therefore impact your payments during your bankruptcy. You need to have this question with your trustee – they will have to decide what a reasonable income for someone performing the duties that you perform may be.

If the restaurant is only your wife’s in name, but you actually run the business, then I suspect your trustee will simply “add back” whatever you pay yourself to the business and assess your bankruptcy payments based on the net income of the business.

Again, discuss this in detail before you file so that there won’t be any surprises.

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