Question about bank accounts before, during and after filing C13.

[cspa522]

We are looking to file Chapter 13 at the end of September, more than likely. My attorney is drawing up the paperwork, so as of right now I don't know what our DMI is. I know the plan will be liveable, and since we make above the median income, it'll be for 5 years (that's how that works, right?).

I have been advised by our attorney that any major purchases of $500 or more are going to be questioned during the filing, so to avoid those, which is fine. The only "major" thing I'm planning to get before filing are 2 new tires, which should be about $300, and I'll provide a receipt if required.

However, she also told us that she suggests we have the minimum we can live on in our checking and savings accounts before we file.

1. I guess the trustee/courts check to see how much you have? And they can take it if we have "too much?"

2. What is "too much?"

3. If I stop paying on my bills until the filing goes through and we start the repayment, of course I'm going to have a lot more money in the bank than usual.

4. Can I justify using some of the extra money we'll have initially to do some minor home repairs? We have some faucets that need to be replaced, etc. Nothing expensive, just something we were going to budget for, but could easily fix without dropping our usual $1400 a month to pay on credit cards.

5. Do the trustee or the courts check your bank statements throughout the month/quarter/year?

Thanks everyone!!

[ColoradoBell]

I guess it might differ by district.
I gave about 3 months worth of bank statements to my attorney but I don't think any of that went to the trustee who just asked for my tax returns.
When looking at your DMI however, the t rustee will question anything that looks like too much , and ask for receipts.

I did send the amount I had in the bank on the day that I filed to my attorny so you might want to plan for that.

[SMinGA]

There really isn't a situation of having too much money in your account when filing ch. 13. All you own as of the filing date becomes part of your bankruptcy estate, and is listed on the petitions. You claim exemptions for what you can. Anything over your exemptions - including cash on hand - creates a liquidation test. If you were to file ch. 7, your creditors would be entitled to the value of anything over your exemptions. In a 13, they must get at least that much. Say you have $5,000 in cash or property that you cannot exempt, your creditors must get at least $5,000.

Doing home maintenance, buying tires, etc. should not be an issue. Your atty said your spending may be questioned - he did not say you were not allowed to spend $. Just keep your receipts.

Start regular spending on groceries, gas, clothing, medical, etc. This can be an adjustment, especially if you were putting those things on a card before - or avoiding things (like home maintenance, tires) because all your money went to the cards.

You should be able to figure out what your plan payment should be. Figure net monthly income. Take average paycheck, multiply it by 26 if paid biweekly or by 52 if paid weekly and divide by 12. (If you're paid 1x per month or 2x per month - which is not the same as every 2 weeks - then you can easily figure out your monthly.)

Add up all the bills you'll pay on your own. Utilities, telecommunications, insurance, etc. Write out a reasonable budget - groceries, gas, household spending, medical, home & auto maintenance, etc. Even school supplies, pet needs, etc. if you have them. You should be able to include a reasonable amount for entertainment - probably in the $50-100 range.

The difference is your DMI = your plan payment. The variable things would be whether or not your home, cars are paid in or outside of the plan.

Do not forget to count irregular expenses. If you pay your property taxes (not in escrow) each year, factor 1/12 of the amount into your budget. Same for other irregular things, estimate the annual and divide by 12 and it needs to be in your budget. And you'll need to set that money aside each month...

Problems come in when your atty builds a plan without you having gone thru your budget in detail. Your atty doesn't know you well enough to know how much $ you need each month, afterall. Some expenses may be questioned - such as if you have high cable, cell, etc. That is where some negotiation comes in w/ the trustee. But if you have realistic figures - that your atty uses to build your plan - in all that you do have control over, you should be ok.

Ch. 13 may require some sacrifices - but it forces you to live within a budget which is not really a bad thing?

[cspa522]

Okay, so laying it all out there are a couple possibilities for us:

Monthly income: $6092/month
Utilities: $230/month
Mortgage: $1200/month
Home Owner's Insurance: $103.00/month
Auto insurance: $90/month
Life insurance: $100/month
Car loan: $469.00/month
Cell phone: $160/month
Cable/internet: $160/month
Groceries/toiletries/household cleaning/personal care: $800/month
Orthodontics: $100/month
Daycare: $840/month
Clothing: $50/month
Gifts: $50/month
Entertainment: $50/month
Vet: $25/month
Prescriptions: $50/month
Auto repair/maintenance/gas: $250/month
Real estate taxes: $200/month
Personal Property taxes: $35.40/month

I can't think of anything else to include in there. If I do the math right, that would mean we'd pay about $1049 a month to the trustee. And that's depending on a few things.

We're going to hopefully write off our 2nd mortgage as unsecured debt. Waiting to get the appraisal now. If it's not, we'll add in another $612 a month for that. Also, our car loan has $10,000 left on it, but the car itself is only worth about $7000, so we're going to try to cram that down (I think that's the right term?). So not sure what that payment would actually end up being.

Also, I'm going to try to work with the mortgage company to get our taxes and insurance escrowed back into our loan so that's one less thing I have to worry about. But all that should do is increase the mortgage and subtract the insurance/taxes from that list.

Am I missing anything? Does anything I've listed look outrageous? I need to find out what the limits are in Missouri as far as monthly allowances for food, clothing, etc. for a family of four.