The bk pre-planning thread

[harris]

Lets suppose someone knows that by December they will have $4000 more
in Cash then they can exempt.
Should They a) Today go out and spend the money on say Household goods by placing it on a credit card and pay off the credit card in Jan,

or b) Should they wait until Jan and spend actual cash, shortly before they file.
Asking a hypothetical question.

[keepmine]

Lets suppose someone knows that by December they will have $4000 more
in Cash then they can exempt.
Should They a) Today go out and spend the money on say Household goods by placing it on a credit card and pay off the credit card in Jan,

or b) Should they wait until Jan and spend actual cash, shortly before they file.
Asking a hypothetical question.

Once bk becomes a viable option, you should stop using credit cards if at all possible.
Use the money for legal fees, HH expenses, car repairs, dental work, eye exams and glasses/contacts,etc.

[Isobel]

Hi everyone -

I'm about to file Ch 7 on July 1st. I have some savings spread among 3 new accounts that are not connected to any of my creditors (far as I know). Are these funds in danger of being frozen or seized?

And after filing, can I used my new debit card on a regular basis, or should I withdraw cash for 3 months of living expenses? This is all quite scary...

[sunshinepa]

Hi everyone -

I'm about to file Ch 7 on July 1st. I have some savings spread among 3 new accounts that are not connected to any of my creditors (far as I know). Are these funds in danger of being frozen or seized?

And after filing, can I used my new debit card on a regular basis, or should I withdraw cash for 3 months of living expenses? This is all quite scary...

Can your savings be exempted? Once you file, nothing can be seized (except by the trustee) while the automatic stay is in effect. You can use your debit card whenver you want for everyday expenses both before you file and after. After filing there would be no need to withdraw cash for living expenses.

You are being up front and listing the savings in your BK petition right?

[Isobel]

Can your savings be exempted? Once you file, nothing can be seized (except by the trustee) while the automatic stay is in effect. You can use your debit card whenver you want for everyday expenses both before you file and after. After filing there would be no need to withdraw cash for living expenses.

You are being up front and listing the savings in your BK petition right?

Yes, I'm being up front about everything. I guess there are a lot of people out there who aren't honest when they go through this process, because I keep feeling like I'm constantly defending my honesty. Can't wait til it's all over....

[karm43]

yessss

[mtbjoe]

We’ve been speaking to a lawyer for the past couple of weeks and we need to reduce my income by claiming less exemptions and convert a couple of helocs (180k worth) from interest only to a 30 yr. fixed at 11% which should qualify us. Of course doing this also means we’ll have no way to pay many of our bills and we can’t file until October.

I was just wondering how important it was to be current on your home at the time of filing Chapter 7 if you want to have any chance of keeping it or if it even makes a difference?

[keepmine]

We’ve been speaking to a lawyer for the past couple of weeks and we need to reduce my income by claiming less exemptions and convert a couple of helocs (180k worth) from interest only to a 30 yr. fixed at 11% which should qualify us. Of course doing this also means we’ll have no way to pay many of our bills and we can’t file until October.

I was just wondering how important it was to be current on your home at the time of filing Chapter 7 if you want to have any chance of keeping it or if it even makes a difference?

You don't have to be current but, you need a plan to get current {and stay current} in a hurry or, your lender will file for relief from stay and proceed with foreclosure.
Just be sure the home is worth saving. $180K at 11% is a bad deal. Are you underwater?

[mtbjoe]

You don't have to be current but, you need a plan to get current {and stay current} in a hurry or, your lender will file for relief from stay and proceed with foreclosure.
Just be sure the home is worth saving. $180K at 11% is a bad deal. Are you underwater?

Thanks Keepmine!

Yes, we're underwater, here's the breakdown
1st 400k
2nd 60k
3rd 115k
The house value is right around 500k

I won't attempt or even to be able to save the house at those terms. I'm just thinking about taking one last shot at working with the bank to see if they will make them more reasonable allowing us to keep it after we file.

If I file with all 3 current then stop paying just the 3rd while keeping the 1st and 2nd current I'm hoping I may be able to get them modified somehow before they foreclose due to the 3rd. Without the credit card debt if they cut the rates in half we should be able to comfortably make the payments and keep the house.

I'm driving myself crazy deciding if this long shot is even worth trying. We're willing to take a reasonable risk but if they will start the foreclosure as soon as we miss one payment on any of the loans and there's no chance of them working with us because of the Chapter 7 then maybe it's not worth it and we should walk away asap...

[arthoralbert]

Great information appreciate to you.

[AdamGarcia]

My only word of advice is to be careful with exemption planning. Make sure to consult your attorney before you convert nonexempt assets into exempt assets. Some cases have had difficulty with the line between exemption planning and hindering creditors. Unfortunately, in exemption planning "pigs get fat, hogs get slaughtered." (Not my phrase).

[DrowningInMI]

Question...my son has a bank account and my name is on it too. Should I just take my name off? I don't want him to lose his hard earned money. How long should I wait afterward before I file?

[mcordry]

I just encountered this same problem. I was on my sisters account just because of practical reasons of something happening to her and me needing to get access to her account. I never put any money in her account and my attorney said as long as I could prove I had no vested interest in the account it would not be a problem He told me to absolutely not take my name off the account because the trustee might see that as hiding money. But it was not ever an issue, at my 341 the trustee never said a word about it and I had brought the bank statements to show I had never deposited any money in the account. But he never asked for anything. I think as long as you show it in your paper work and can prove you have not put any money in the account... you will be fine.

[Spider777]

New here and considering bk..I just have a few questions.

My husband is the only one working, I stay home with our baby. The majority of the debt is in his name, not joint. I have a bit in my name as well. Is it more beneficial to file joint (or do we -have- to?) or is it better for just him to file and keep trying to pay my debt down so one of us will have some credit in the event we need it?

my second question is probably answered somewhere else on this board, but I'm a little overwhelmed by all the threads so I'm hoping I can just ask here. Right now all of our debt is up to date with payments. We aren't behind on any. They're just all maxed and apr's are eating us alive. So we're drowning but breathing through a straw ;) Of course we would just stop paying everything..but how long after we stop do we actually go meet with a lawyer and begin the process of filing? We obviously don't want any judgments against us before we can file. I've heard it's 3-4 months before creditors will close the accounts and send to collections..do we wait until then?

Also..do we need bills for each account when going to a lawyer? We have two medical bills in collections (that we've been paying)..how do we present our creditors information and debt info?

Thanks in advance for any advice

[misterlucky]

Hi all, this is my first post, I'm a newbie. My wife and and I live in WA and have about $60K in unsecured debt, mainly CC debt. We are planning to file BK 7 and have an attorney engaged. Of this one is $27K and the CC sold it to a collector who sued and got a judgment against us. We are both self employed and keep little cash in our bank accounts.

We do own a home with approx $170K of equity and WA has a homestead allowance of $125K. We also each have Roth IRAs that I self direct and have been doing investment deals in the Roth to earn retirement income. We are both over 60 yrs old and can start drawing from the Roth if we want.

Our attorney said to have the $27K judgement filed against our home to reduce the equitable value to keep the BK court from forcing the sale of our home and he can then have it stripped once the BK is completed. Any thoughts on this?

Also, regarding our SDIRA Roth accounts, can the courts force us to liquidate any portion of this to pay down debts? This is not a company retirement plan, it is just a self directed plan with a IRA custodian through whom we would take any distribution. Any comments/advise on the above is appreciated.