General Chapter 7 help needed

[imdk2005]

[SMinGA]

First: if you have not paid this one, its never 'too late' to change lawyers. But I imagine part of your time constraint is that if you got the severance pay in May, you need to file in May to keep the $20k off of your 6 month look back?

My understanding: Roth IRAs are exempt.

If your net is $4,000 and expenses/etc. monthly are $3,800 - that leaves $200 for a ch. 13 plan payment. Have you carefully reviewed your expenses to make sure everything is accounted for?

I'm guessing you are using federal exemptions? With no home equity, up to $10,125 of the homestead exemption can be used as a wildcard. Plus $1,075 of any property - so that is $11,200 per person or $22,400 as I understand it...

You could also ask your attorney about prepaying things such as utilities, auto insurance, etc.

[imdk2005]

Thanks SminGA,
you’re correct the constraint is that I got the severance pay in May so I have until the end of Month to file. So I guess I’ll have to stay with this Lawyer and I did already pay him... I’m bad A bit too trusting I thought that he would do the right thing now I’m not sure he’s up to speed on all that’s happening as he has not given me a good feel yet that things will be ok.. It seems he is going off of the income I was making before I lost my Job this past March where I had 4000 a Month and my partner had 2000 but now I only have 2000 from un employment and my partner still brings in 2000 a month which will not cover our debt. Do you know how this works? Does the trustee look at the gross pay over 6 months or the net pay? I am sure if I double check all my expenses they will = more than my partner and I bring in Monthly. But if you look at the gross pay over 6 months it may be enough to pay the bills which in reality we do not have gross pay I guess I don’t understand what is being used to determine what you can afford to pay (gross or net)?

[SMinGA]

The means test to determine if there is a presumption of abuse looks back at the prior 6 months. Schedules I & J look at current/forward.

Insist that he acknowledge your current income situation.

[imdk2005]

general question

Looking for advise - I have a $5000.00 over draft account attached to my checking account and it is under by $2800 dollars . I wanted to know if I pay that back will the Trustee question it and make me pay it back? Not sure if an over draft is looked at in the same way as un secure debt is and I am looking to turn non exampt cash into exampt .. thanks for your in put.

[SMinGA]

You won't pay it back - but the trustee will make the bank pay it to the trustee to be spread out among creditors. It is an unsecured debt.

Best thing to do? Open another bank account (different bank), change direct deposits, etc.

[imdk2005]

My problem is this is the bank I have both my home loans with and would rather not change things with them because I need to workout a home loan modifacation once we get through the bankruptcy. I guess I won't pay them the balance yet and just pay them the 60 dollars or so monthly. I'll have to come up with other ways of turning non exampt into exampt. My lawyer was not sure if putting money into a roth account would be ok or not? 1st he said do it than he said maybe the TT could take it back however I see it as being exampt do you know for sure if putting money into a roth account is safe?

[newbie2]

My problem is this is the bank I have both my home loans with and would rather not change things with them because I need to workout a home loan modifacation once we get through the bankruptcy. I guess I won't pay them the balance yet and just pay them the 60 dollars or so monthly. I'll have to come up with other ways of turning non exampt into exampt. My lawyer was not sure if putting money into a roth account would be ok or not? 1st he said do it than he said maybe the TT could take it back however I see it as being exampt do you know for sure if putting money into a roth account is safe?

I'm a wee bit concerned that the attorney you hired doesn't know if you can safely put away funds in a Roth IRA. Seems to me that this isn't a difficult question for an attorney to answer.

[imdk2005]

Yes, I am a bit worried as well that he does not know for sure about roth accounts.. problem is I have to file before the Month ends so not to have my severance pay added onto my last 6 month look back, And since I had been instrucked to stop paying my CC's in March there's not much i can do except hope for the best... all feedback, help and suggestions welcome.

[SMinGA]

MOre than likely, it will have no impact on any potential home loan modification regardless of where you bank at.

Having your local bank as a creditor for an unsecured debt, however, can be a problem. Even if you pay the account off, unless you can wait 90 days between paying it off & filing, then the trustee is going to take the funds back and most of it will end up discharged in your bankruptcy. The bank may freeze your bank account anyhow.

Have you looked up your state's exemptions? You should be able to figure that out for yourself. Sadly - your atty should be able to figure out the same, though he should know the exemptions.

[imdk2005]

Thanks all for your feed back this is so very helpful.

SMinGA, I am going to take your advise on opening a different bank account where we have no credit out with them. but, I think we will keep my partners pay check as a direct deposit since we have two outstanding mortg loans with this bank and her whole check will go towards the payments nothing left over.. these are secure loans. We are keeping the house so if the bank freezes our checking account how would they expect to get paid? I just won't leave anything extra in it. does that make since or not? plus I am getting unemployment which will be used to pay all other living expense's and these are hard checks not direct deposit.

PS : I am going to use the federal examption which allows use to exampt up to 10,000 each but wanted to know if we could also have a 5000 dollar roth account each as well since I had enough to do that? I thought that the federal code states roth accounts are exampt but just didn't know if since I am opening them before filing if the TT could ask for them back?

[SMinGA]

The mortgage company does not care how it gets paid, and they do not necessarily have control over the banking side.

A little quick research may be in order: How long would it take for the employer to change the direct deposit if/when you no longer have access to use that checking account?

http://bankruptcy-law.freeadvice.com/bankruptcy-law/federal-bankruptcy-exemptions.htm

Tax exempt retirement accounts (which include 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined-benefit plans): all. RAs and Roth IRAs: up to $1,095,000 per person.

[imdk2005]

ok, I just found the federal exemptions and see that the roth accounts are exempt also states that unemployment is exempt? so do you think I am safe to say that both me and my partner just opened and deposited 5000 into a roth account one for 2009 and one for 2010 should be safe from the TT? also what does it mean that unemployment is exempt?

Federal Exemptions
Unemployment, disability, and illness benefits: all. (d)(10)(C)
Life insurance payments from a policy taken out on someone the debtor
Pensions Tax exempt retirement accounts (which include 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined-benefit plans): all. (b)(3)(C)
IRAs and Roth IRAs: up to $1,095,000 per person. (b)(3)(C)

[SMinGA]

I believe it just means UE compensation cannot be garnished. It might also mean that funds in your account that come directly from UE pay are exempt, even if they are exist as cash on hand. That would be better left to an attorney to answer. (Have you considered scheduling a 'consultation' with another atty, without telling him/her you already have one retained, just to get some answers?)

Based on that subsection of the bankruptcy code, Roth IRAs would be exempt. As to whether or not you can still make contributions for 2009, I have no idea on that one...

[imdk2005]

Much thanks SMinGA for all your responses they have been very helpful. these loans with the bank i have my check and OD account with are home equity loans - they they wouldn't care if the bank froze my acount and I couldn't transfer money to them? no wonder we all end up in such a mess one side gives you anything you ask for and the other side doesn't care....

As for the employer I can have the direct deposit stopped in a week so worse case is one pay periord may not be avaible which I could deal with. I am wondering if I should just hold onto my unemployment checks as long as I can without deposting them and use the money I will exempt for bills? not sure it really matters but just looking to keep what we can for future living expenses in case it takes me awhile before finding a new job that may ewven come close to what I was making.