Making Investments while in chapter 13

[aa06a47]

I am considering investing $100/month through a web site called sharebuilder.com. I am curious if anybody else has purchased stocks while in a chapter 13, if it is even allowed, and if there is a gain when you sell it, does the trustee get it?

I realize that 100/month isn't much, but over 5 years it could add up to a little chuck for those emergency situations.

Note, I am putting money in a savings account each month. But, I tend to always find a reason to take it back out. If it is more inconvient to get to, I think I would plan a little better to at least have that money left over each month!!!

[GoingUnderInNV]

Good question! I'd like to hear the answer, too.

[Shaoline]

Really good question. I'm filing as an individual. I was considering buying stocks under my husbands name so I can make a more money while I'm going through the process so we have have money for emergencies. We are down to our last few $$ and we need to eat.

If anyone has any input or experience that would be great!

[Skorpnix]

I thought about doing the same thing per se but instead was thinking of starting a 401K account for about 50 a month. My lawyer stated it was illegal to do that as whatever money I have after bk payment, car, rent etc is mine to use as needed BUT a creditor or trustee found out they there was a possibility that the trustee would relook at the case again and see how come I have an "extra" 50 a month to use for something that is not a necessity which could go to creditors. And this is after I had my plan modified to lower my payment $100 because of rent increase. If they never found out then it would be ok but at the same time at the end of the 60 months they do an audit and I would assume a 401K would show up. I decided to stay under the radar and just get this done with. Hope that helps.

[Flamingo]

What everyone is doing here is playing with a level of risk that could be high or low depending on your own situation and your trustee. I always tend to play it safe because it is not worth messing up your Chapter 13 Plan while you are in it. Our attorney advised us when we were about 3 years into our Plan and I wanted to participate in my Company's 401(k) which matched 100% up to 3% of your salary and 50% from 4-6% of your salary that I could try 1% of my salary and the trustee would have no problem BUT if it in any way affected our Plan payment or we could not pay our other bills or it took away from funds being saved for car or house repairs during our Plan, that I would need to stop immeditely.

THe money you are putting into stocks is increasing your assets and would be of high interest to your trustee. You are not saving money in a pickle jar somewhere to buy that new set of tires that will be needed soon or to replace the water heater. You are increasing the amount of your assets that you listed at filing so, therefore, you are increasing funds available to your creditors.

I would highly suggest that when you embark on any financial efforts or savings program during your 13, and it is not tossing change into a jar or putting $20 a week into the car repair envelope, that you consult with your attorney to see if it is doable in your situation. That $100 extra you are paying toward stocks can easily be seen as funds you have available that can be paid toward creditors.

Lying low is the best way to get through a Chapter 13 - purchasing stocks during a Chapter 13 is not lying low. The risk to me after going through our Plan with dealing with bonuses, 401(k)'s, inheritances, etc., etc. is too high. I would be putting funds away on the side to pay for car or house repairs cause when something goes, it goes and you usually don't have the cash on hand. If you went to sell the stocks to get the money, it's all tied into your SS and taxes and is easily traceable. Plus those are stocks that you did not report when you filed. Does not look too good....

[brokeNconfused]

you mentioned an audit at the end of plan. What is this? If i have cut corners and managed to save $100 a month.. then put it in a jar and kept it under my bed for emergencies, or something once plan is over would they find out? i dont want to leave money in the bank and build it there, but dont want to get in trouble over an audit and i have no idea what that entails? should i be saving ALL my receipts?

[Flamingo]

you mentioned an audit at the end of plan. What is this? If i have cut corners and managed to save $100 a month.. then put it in a jar and kept it under my bed for emergencies, or something once plan is over would they find out? i dont want to leave money in the bank and build it there, but dont want to get in trouble over an audit and i have no idea what that entails? should i be saving ALL my receipts?

The audit done at the end of a Chapter 13 by the Trustee (after the last payment) has nothing to do with this. If you can cut corners and save $100 that is marvelous - save it somewhere safe but not in a savings account and for goodness sakes don't purchase stock with it. While the urge to invest is tempting, it is not a wise thing to do during your Plan for reasons I stated in my posting above. We tried to save about $50 or more a month by cutting corners also and used that money for car or house repairs as they arose and yes they did arise and frequently. The worst was one of our vehicles needing about $600 in repairs and the next day after notice of that bill our water heater went which would cost another $500 for the heater and installation. Before I lost it I called my attorney who got permission for us to skip that month's Plan payment. We had the rest saved up in cash.

After your plan is over you will be able to do things like purchase stock again and not have to worry about stuff like this but the more you lie low and do not rock the boat during your Plan years, the better off you will be.

[AngelinaCat]

Our trustee asked at our 341 if we had any stocks or bonds.

Keep in mind that once you file BK, until you are discharged, your property belongs to the BK estate and the trustee is administering that estate. So be careful.

[woeisme]

I bought a fire safe and that is where I've been putting every dollar we save, so that it's not in a bank account or anything. We've been at it for a year now, and after tax refunds (trustee lets us keep ours if it's under $6500) we had over 3K in savings, right now we are down to $1300 because of car repairs, a vacation, and a decrease in my husband's salary (he's on disability at the moment, but we don't want to ask for a change of plan until we have a better idea of whether or not it's going to be a temporary or permanent situation, as I'm sure the trustee will want to know.) But even though it seems like I have a pretty leinent trustee, I'd never risk putting our savings into a traceable bank account. Now my 403b account is safe as I understand it (similar to a 401K, just for non-profit businesses has a different name.) My trustee knows I contribute and allows it, which is good since it's a requirement that I put in 5% at my work (the employer adds an extra 9%, I'm really lucky there!)

[Mark80]

I'm going to do the firesafe idea also, sounds way better to keep extra cash under the radar!