Have lost all hope.

[Emmy]

After almost 8 years of stuggling to get out of debt, we are considering filing for BK. I just can't do this anymore, my stomach flip flops everytime I get online to pay bills and I'm starting to have trouble sleeping because I'm constantly stressed about our money situation. We have gotten several sizable income tax returns since having children in 2002 and all have gone towards debt and when my husband switched jobs we cashed out his retirement and put 10,000 towards cc debt. No matter what we can't seem to get ahead of it.

We are now at the point and in so much in debt that after paying all of our monthly bills we end up using the minimum payments we just made on our maxed out cards to buy food and gas. My husband just got a small raise that gives us an extra $250 a month. We plan to use that for food and gas monthly and not use our cc for the next 6 months and file for chapter 7 BK.

I did the calculators on the "allowable expenses" thread. We are about $30,000 below the median income and going by the means test caluculater we are a little over $1500 in the negative for monthly living expenses. Does that sound pretty cut and dried for being able to file a chapter 7?

We only rent so keeping a house is not an issue. We would like to keep our cars. Mine is 11 years old and paid. My husbands is 9 years old but he has borrowed on his orginal loan and still owes a little under 5,000. We would still like to keep making the monthly payments for that and keep it. Do you think we will be able to? We are way below all the exemptions amounts for household goods.

We will get about $2400 for our tax return this year. Half of that will go straight to car repairs that are desperatly needed. I have been driving with no heat or air conditioner for 2 years in the midwest. The other half we plan to save for BK costs and for an ER fund instead of putting it on a cc like we usually do. Will that be a problem for filing in April? Will they want to know where that money went?

If you got this far thanks for hearing me out. It's nice to be able to finally put all the thoughts down. Since we decided to file its just been overwhelming and I can't stop thinking about it, my brain just feels overloaded. I've been lurking here and using all the great advice to make a "to do" list for the next 6 months in preperation for the "file date" If there is anything you could add or advise that I can do to prepare for this, I thank you.

[BassBoy]

WELCOME TO THE FORUM EMMY!

You sound like a straight Ch.7 BK. I don't see any issues with the cars, because at 9 yrs old and 11 years old, they aren't worth much, regardless of whether or not a lien is placed on one like you have stated.

As for the IRS refund, I wouldn't spend it. It's likely the trustee will want that. It could be an asset. Granted, it may be you're only asset, but an asset. We got about the same IRS refund amount as you and we had to turn a portion over to the trustee.

You have begun the fisrt steps by doing some diligence and getting your ducks in a row, and that's very important. BK is a difficult decision and not a decision anyone should make without being well informed.

[Emmy]

Thanks for the welcome!

We usually get our tax refund direct deposited the first couple of weeks in Feb and I planned to get the car fixed right away. It will be at the minimum 2 months after that that we will actually file for BK. What can the trustee do if we have partially spent some of the money before ever filing? We don't plan to tell them we have purposly waited 6 months before filing. So would you still wait, even with that timeline? I thought we'd be able to say something along the lines of we weren't planning BK when we spent the $ on the car repairs.

[Jeepy89]

Emmy

It would probably be beneficial to you to change your tax withholding so that you do not get such a big refund at the end of the year. It sounds like you guys sure could use it during the year to help pay for necessary expenses instead of letting uncle sam hold on to it.

[LostOne0069]

Spending the tax return isn't a problem, especially if it's on provable needed expenses, like car repairs.

I'd just keep the receipts, just in case.

Emmy, take a deep breath and relax. From what you stated you really sound like a "slam dunk" case. Go to a couple of free lawyer consultations, they'll probably tell you the same thing and put your mind at ease.

[confusedinVA]

I think I read on this forum before that the trustee cant touch your returns anyway if it was from EIC and child tax credit. Is that accurate? It sounds like most of this refund would be from those sources, I might be wrong though.

[Minnymouth]

I used my tax refund to pay my attorney....... no problem from Trustee.....
Keep good receipts on what you use it for.....

[SinkingFast]

There are a couple of ways you can go at the Refund.

As Jeepy suggested, change your withholdings for the rest of the year. Get more money in the paychecks now and have less of a refund coming next year.

Or, file your taxes early, before you file BK. Get that refund back ASAP and spent before you ever retain an attny and file BK. Keep your receipts as Lost suggested, to prove you spent the money on necessities.

You will want to wait a while before filing anyway. You need to put some time between you last charges and filing. There's a 70/90 day rule in the BK Law. 70 days on Cash Advances. 90 Days for CC purchases. If you file within that time frame, the burden of proof that the charges weren't made fraudulently falls on you. Wait til after that to file and the burden of proof shifts to the Creditors.

If you are current on your CC payments up until recently, you'll probably have at least 6 months or so before any Creditors make a move legally. You'll get phone calls. First from internal collections, then from Collections Agencies after your accts get turned over. Use Caller ID if you have it. If you don't have Caller ID, use an answering machine to screen the calls. Answer when it's family and friends, don't answer when you don't recognize the numbers.

If you're below the Median, you don't have to complete the Means Test. You use Form B22A and stop at Line 15. Then, the issue of disposable income comes down to a comparison of Schedule I to Schedule J. I is income. J is your real expenses.

When figuring your expenses, don't include any payments to Creditors that you will discharge in BK.

[SinkingFast]

I think I read on this forum before that the trustee cant touch your returns anyway if it was from EIC and child tax credit. Is that accurate? It sounds like most of this refund would be from those sources, I might be wrong though.

That is the rule, CVA. You are correct there. There have been posters that got refunds because they had children where they would not have gotten a refund otherwise. The Court took the returns regardless.

I guess this is one of those issues that varies District to District and Trustee to Trustee.

[Emmy]

You will want to wait a while before filing anyway. You need to put some time between you last charges and filing. There's a 70/90 day rule in the BK Law. 70 days on Cash Advances. 90 Days for CC purchases. If you file within that time frame, the burden of proof that the charges weren't made fraudulently falls on you. Wait til after that to file and the burden of proof shifts to the Creditors..

Yes, we are waiting until April and planning no more credit card use after this month.

If you are current on your CC payments up until recently, you'll probably have at least 6 months or so before any Creditors make a move legally. You'll get phone calls. First from internal collections, then from Collections Agencies after your accts get turned over. Use Caller ID if you have it. If you don't have Caller ID, use an answering machine to screen the calls. Answer when it's family and friends, don't answer when you don't recognize the numbers.

We were planning on continuing to to pay all of cc minimum payments up until we file. That means we will be totally broke until then but we thought it would make the bk proceeding go smoother as far as the creditors because our cards won't be totally maxed and we made the attempt to pay what we could before filing.

[Emmy]

Ok, I just figured out Schedule J and I vs the means test from searching on the site. This site is awesome by the way!

My question for J is how many months must you show receipts? If we stop paying the cc's and use that money for food, clothes, get myself some health insurance ( I currently have none)....we will not have any disposable income.

If I do keep paying the cc's, won't the 400-500 worth of cc payments show up as disposable income?

How do I work this so that the numbers will line up for my chapter 7? We are still 6 months away from filing. I planned on making cc payments until then but if it will screw up the disposable income part of our BK, I'll do whatever we need to do not to mess it up.

[CAB_44]

Hi Emmy~ and WELCOME!
You are in the same boat that all of us are rowing sweetie~ just relax, or try to anyway...
I stopped paying my CC in July~ for the same reason....you just can't do it anymore....that's how I felt too....
I am going through the same feelings/emotions as you are... but when the dust settles, you will be glad you came to this decision~
it hurts, but when you stop and realize just how much better things will be down the road and that you'll finally see a light at the end of the tunnel, you'll begin to relax some!
There are SO many qualified people here that can help you through this tough decision!
I'm going through it myself and am still new, so I can't offer you much info, other than to say~ you'll be okay!
Blessings to you~
CAB

[SinkingFast]

My question for J is how many months must you show receipts? If we stop paying the cc's and use that money for food, clothes, get myself some health insurance ( I currently have none)....we will not have any disposable income.

If I do keep paying the cc's, won't the 400-500 worth of cc payments show up as disposable income?

How do I work this so that the numbers will line up for my chapter 7? We are still 6 months away from filing. I planned on making cc payments until then but if it will screw up the disposable income part of our BK, I'll do whatever we need to do not to mess it up.

You don't have to show any receipts initially. May never be asked to show receipts at all. Just depends on the wind, whether or not the Trustee has a bad hair day, if the Courts come down with some odd opinion,.......... Just suggesting you save receipts so you'll know what to tell attnys you spend for things. And as a CYA in case you get asked to verify some sort of expense.

Yep! You are right about the CC's payments money becoming disposable income every month. When you file BK, you don't include in your monthly expenses any debt you plan to discharge.

If you quit paying your payments today, what would you use that money for??

Maybe to buy the Health Ins you mentioned. I'd bet you've hardly been buying any clothes for a while and when you do, you pay with a CC. Do you buy groceries with a CC?? Pay cash instead.

Do you need to go to the doctor, dentist?? Car repairs?? House repairs?? Anything you've been putting off because you don't have the money, start taking care of those needs.

The Court doesn't mind necessities. Just don't go taking a lavish vacation with the money.

Also, you're gonna need money for filing fees, pre and post BK Certs, and attny's fee.

Plus, any Creditor that you pay in excess of $600 total to in the 90 days prior to filing BK, the Trustee is going to go back to those Creditors to get that money back. You may be required to appear in Court to explain those payments. Overall, just best not to go there if you can avoid it.

[debtisbad]

Hi Emmy,

Just wanted to stop by and say "hi" and welcome to our little corner of the world. We have all been where you are.

Debtisbad

[miss puff]

Hi Emmy *waves* Welcome to the boards. We have all been there, are still there or are planning to be there. Like Sinking Fast said, buy neccessary items that you need right now. You might be surprised that even without the monthly debt payments your income will be eaten up by neccessary items. Ours sure did. Even without all our debt that our chapter 7 will hopefully wipe out it could be easy to get in a pickle again if a major thing happened with us like job loss, car replacement or needing a new roof or something. Kind of an eye opener and wondered how we juggled for as long as we did. Good luck, breathe and try to sleep better. Many of us have had sleep issues and many more issues going through this so feel free to vent, ask questions and gather as much information as you need. Good luck hun *hug*