Pre BK Planning?

[chinup]

During my discussion with an attorney, she mentioned the 'the guy that just left' was going out to buy two new cars and selling his old ones and then filing 13 right after. Is this possible?
Sure, there are moral implications, but I figure if he could buy two new cars, then his credit must be OK to begin with unless he is expecting tough times ahead.......... Go figure.
Attorney told me it's called Pre BK Planning, "Happens all the time." Is this like racking up the CC just prior to filing. Gheesh.

[NoTomatoCan]

No moral implications in that at all and it is nothing like running up CCs leading up to a BK.

A new car is a secured loan that will get paid back in full. A CC in an unsecured debt that will typically only get fraction of their money paid back, depending on what unsecured creditors are getting in the CH13.

So yes, this is possible and is highly recommended heading into a BK. Whether it is a new car or a new to you car, you need reliable transportation that will last the life of your plan. As your attorney pointed out, it is very standard pre-bk planning/strategy.

[ColoradoBell]

Thanks for that explanation Tomato!
I had no chance to 'plan' for my BK, so I'm at the beginning with an 8 year old car. Luckily, I like older cars, cuz I'm going to have to make this one last for at least 5 more years.

Other pre planning tips would be to get non exempt money into exempt assets like IRAs/HSAs/401 ks/even a house I guess.

[chinup]

anything else someone should think of prior to filing? Up the 401k contribution?

[ylime]

This may just be me, but having an attorney willing to freely discuss someone's financial situation or plans would throw up a red flag for me. I would definitely not feel comfortable with this type of attorney knowing they would be just as likely to discuss my information with other clients.

[jmac]

I think the car deal is a smart move, plan on doing it myself. The 401k i think they would look at last 6 months paychecks and if your 401 contributions changed big time it will be a red flag. Maybe not it would be nice if you could i would raise mine.

[lrprn]

The 401k i think they would look at last 6 months paychecks and if your 401 contributions changed big time it will be a red flag.

A big issue with changing 401K contributions before filing is that many local courts cap the amount you are allowed to contribute to retirement during your active Ch 13. Ours allows our individual contributions to be 5% of our individual annual incomes each.

Be sure to talk to your lawyer to find out what your Ch 13 trustee allows to be contributed to retirement during an active 13 before changing your contribution % before filing.