This is new to me...so confused

[Billssuck]

Hello!

I just found this forum today and it is already making me feel like I'm not alone. I have so many questions; here is some info about my case:

Income: $5,750 per month
1st Mortgage and HELOC: $2000/month (Owe about $243,000 for both).
Home was assessed 2 years ago at $265,000 but who knows now
what it would sell for or what it is worth now.
No car loans. Total value of 4 VERY older cars (high mileage) about $11K
Current bills (other than unsecured debt) and living expenses = $5,000/month
Unsecured debt: $107,000. Yuck!

We went through Consumer Credit and of course they couldn't help us. Then we have retained an attorney to file CH13 BK. We have 3 of us at home right now but our income would be above the median with that size of household so we are waiting to file until our 18 year old son is back home from college for the summer so that our household size is 4 and we'd be below the median for that member size. I hate waiting another 6 weeks to file but if that means we'll be on a 3 year plan vs a 5 yr plan, then it will be worth it.

My history is that of many years of poor financial decisions and I honestly believe than I am a credit card addict! But I am 45 and would like to retire in 20 years and that $107K won't allow it so I must do something about it now.

Here are my questions:

1) Are tax refunds given each year of the plan to the trustee?
2) I have a Credit Union Line of Credit (about $1K). Should I close that account and put my paychecks into another account that I owe nothing to? Can they freeze accounts when you owe a bank nothing?
3) Are trips frowned upon right before a hearing? My oldest is graduating from college in CA in June and I want to go but I am afraid that will be looked at as a luxury expense. It'll cost me about $1K to go there from where I live.
4) Should I save all receipts for food, clothing, gas, etc "just in case"?
5) I have a baby also at home (yeah...quite a gap) and I pay my sitters cash per their request. Should I have them sign receipts for childcare?
6) How can I stop creditors from calling all of the time? I have sent out letters saying to cease all phone communication on cell phone, home phone, and at work and to put it in writing through the mail but they continue to call. And...I am just now 1 month late on my bills. My mortgages are current.
7) Can we find a way to pay back a family member $1,500 prior to our hearing without him being viewed as preferential? I just hate not paying him back; it was so nice of him to help us out one month....
8) Will the trustee ask for bank statements? Should I try to keep away from having huge cash withdrawals of large amounts? I just took out $500 to pay my sitters and to buy groceries and now I am wondering if that will be a red flag.

Im sure this isn't all of my questions but I thought this forum may be able to help me.

Thanks a bunch!

[lrprn]

1) Are tax refunds given each year of the plan to the trustee?

It depends on your local court's practices. Some trustees want the whole thing, some want anything over a certain level, and others don't care about it. You won't know what will happen in your case until you set up your free initial consultations and talk to several experienced bk lawyers in your area before filing. If you've already retained a lawyer, ask him/her.

2) I have a Credit Union Line of Credit (about $1K). Should I close that account and put my paychecks into another account that I owe nothing to? Can they freeze accounts when you owe a bank nothing?

If you are negative on the Line of Credit (in other words, have used it and owe the bank money), then it's best to get your checking account out of that bank/credit union into another where you have no associated debt before filing.

3) Are trips frowned upon right before a hearing? My oldest is graduating from college in CA in June and I want to go but I am afraid that will be looked at as a luxury expense. It'll cost me about $1K to go there from where I live.

Again, whether it's considered a legitimate expense depends on your trustee. Another question to get legal advise about.

4) Should I save all receipts for food, clothing, gas, etc "just in case"?

If you are going to have expenses that are significantly above your neighborhood and family size average for food, clothing, gas, etc then yes - save the receipts. Your trustee may ask you to verify that you are above the normally allowed levels and ask you to justify why.

5) I have a baby also at home (yeah...quite a gap) and I pay my sitters cash per their request. Should I have them sign receipts for childcare?

Do you claim the childcare expenses on your own tax forms each year? If you do, then you may be able use that to prove your childcare expenses if needed. Add this question to your lawyer list too to find out what will fly in your local court and with your trustee.

I'm betting your sitters are asking to be paid in cash because they are not reporting the income to Uncle Sam on their income tax forms. This could be quite a can of worms for them if you claim the childcare on your own taxes and they aren't filing it themselves. Be sure to discuss this with your lawyer. Find out if you can continue paying your sitters cash but start keeping a cash receipt book showing the payments.

6) How can I stop creditors from calling all of the time? I have sent out letters saying to cease all phone communication on cell phone, home phone, and at work and to put it in writing through the mail but they continue to call. And...I am just now 1 month late on my bills. My mortgages are current.

Three options many use - (1) Get a pay-as-you-go cellphone with a new number. Give the number out to family and close friends only and ask them to not give the number out to anyone that may call asking for it. Turn off the ringer on your home phone. (2) When the phone rings, pick it up, identify yourself, verify who is calling, then quietly hang up the phone. Repeat as needed. On bad days, just pick up the phone and quietly hang up. Repeat as needed. (3) Once you retain a lawyer, answer the collection calls, provide your lawyer's contact information and that you will be filing bankruptcy soon, and hang up.

7) Can we find a way to pay back a family member $1,500 prior to our hearing without him being viewed as preferential? I just hate not paying him back; it was so nice of him to help us out one month....

No, you can't pay back an insider (and a family member is an insider) any large sums of money within a year of filing or take the risk your trustee will demand the money you paid back from the family member.

Now if you budget very carefully, are lucky after your 13 is confirmed, and once you've built up an emergency fund, then you may be able to pay back the money little by little on your own quietly. And of course, once your case is successfully completed, you can pay back anyone you want as much as you want.

8) Will the trustee ask for bank statements? Should I try to keep away from having huge cash withdrawals of large amounts? I just took out $500 to pay my sitters and to buy groceries and now I am wondering if that will be a red flag.

Yes, your trustee will ask for bank statements - how many depends on your trustee's practices - could be anywhere between 1 and 6 months back. As long as you can show where the cash withdrawals went to if you have to, you're fine. See the 'saving receipts' area above - just save all the receipts from your cash purchases. Trustees understand spending money for legitimate living expenses - groceries, clothes, etc. Where you get into trouble is if you can't show what the money went for or if the purchases are considered luxuries, not necessities.

[DUMBAGAIN]

Question---My paychecks are not currently direct deposited. So, if I don't deposit the entire check, keep cash back, will that get me into trouble? I too have a relative I would very much like to pay and we need a mattress really badly. I wanted to get it before I file. But I don't want it if it will get me into trouble.

[Flamingo]

8) Will the trustee ask for bank statements? Should I try to keep away from having huge cash withdrawals of large amounts? I just took out $500 to pay my sitters and to buy groceries and now I am wondering if that will be a red flag.

Welcome to the forum. As to your question above taken out of your main posting, note that depending on your trustee, you can be asked to provide anywhere from six months to one year of bank statements for savings and checking accounts. We were asked to provide one year and we had to provide a written explanation as to all withdrawals or checks written over a certain amount and all deposits made into the account over a certain amount (I believe it was $500). So be prepared for anything during that time frame and if asked for any documentation at all, comply with the request because if you don't, it can seriously delay things.

[Billssuck]

Irprn and Flamingo...thanks for your good responses! As far as childcare and taxes, "no" I do not claim the childcare on my taxes as I pay a reduced rate already and it is our agreement. So I won't be getting them into trouble in that way.

I appreciated the advice on the phone calls. But I have further questions with regards to this too. I have retained a BK Attorney. I'm just worried that if I let the creditors know too soon that I'm filing BK that they will have time to start wage garnishments before I can file the middle/end of May. We have to wait until then to make sure our son is living under our roof for the summer from college to have our family size up for the median income issue. How soon do they typically wait to pursue wage garnishments? I've heard that most wait until you are 60+ days late on payments and we would be just over that by the end of May.

[lrprn]

I have retained a BK Attorney. I'm just worried that if I let the creditors know too soon that I'm filing BK that they will have time to start wage garnishments before I can file the middle/end of May.

You don't have anything to worry about if after you tell them you plan to file, the creditor only has a month to 6 weeks before it happens. The creditor has to file the garnishment case, the court has to schedule it, you have to be notified, then you wait for the court case to happen. It's just not a fast process.

Check with your lawyer to be certain, but if the experiences here in the forum are typical, you have at least 4-6 months - sometimes far longer than that - before the creditors get the court process far enough along to actually have the court authorize a garnishment.

[Billssuck]

Irprn...thanks again! I did send an email about this to my BK attorney and I was told that it would take 60+ days for anything to be started wrt wage garnishments. She thought it wasn't an issue to let them know I had retained a BK Attorney at this point. I'm just so new to all of this and am scared of my "naive" consequences.

[eddiep]

Billssuck

That is what this forum is for! Ask away! You are new to this and at one point everyone here has worried about these same things! Probably the best advice I can give you is to ask someone before you do anything, the stakes are high and not having all the facts can be dangerous. Infomation is key to getting through this.