new and now worried

[bxtzd3]

here is my story. last dec my wife and i decided to sell our house and build a new one. we were told we would have no problem selling our house, so we started the build of a new one. then the housing market went down hill. well, now we have 2 morgages car payments and the usuall credit cards, that got ran up to cover other bills. i know your not suppose to pay with credit but i kept getting told we would sell. our house went from $285 to $229 and still nothing. we were going to do a deed in liu but while doing the paperwork we reliezed the left over money a month for gas and food was $200 for a family of 2 kids and one on the way, not planned. so my lawyer told me chapter 7 would be good for me. heres my delemma. i have a balence transfer that i did in june for emergencies still in the account, and a motorcycle that is payed for on a yamaha card, thats how yamaha does it, so i hold the title. now one- should i transfer the bike to my sister and 2- put whats left over in the bank back on the card.
i understand these are suggestion, but after reading some of your stories i real scared about doing this . we of course plan on never using credit cards after this.
any insight would be great.
don

[JollyGG]

Do not transfer the bike to your sister. That is a transfer to an insider and the trustee would go back undo the transfer and sieze the bike. You will probably be able to cover the bike with some sort of exemption.

As for the money in the bank from you last cash advance - How much was the cash advance for? Have you been making payments to that card? At this point I would recomend using the money to pay your lawyer and get caught up on nessesarry, neglected living expenses. Keep reciepts. If you pay the money back now it would be a preferential payment that the trustee would just undo. Since the advance was over six months ago the odds of an objection from the credit card are lower (depend on the amount).

Make appointments with several 3-4 lawyers and run your situation by all of them to see what they say. You should get a good idea of your situation and your options from these meetings. Most initial consultations are free.

In the meantime it wouldn't hurt to look up your state exemptions and state median.

Median income http://www.census.gov/hhes/www/incom...medfaminc.html

exemptions http://www.bankruptcyinformation.com/services.html

[bxtzd3]

the transfer was for $17000. we have 8 of it left. most of it went to pay for stuff in the new house. we also had to get new appliences, wich a stove was stolen so we had to re-buy that, for the new home. this sucks!

[lrprn]

Welcome to BK Forum - glad you found us!

We can help you sort things out a lot better if you tell us what state you are in. Also if you look back six months and count up all sources of income (including the $17K if you got it in cash or transfered it directly into your checking/savings account), divide by 6, then take that times 12, how much is that total? Is it safe to assume you want to give up the old house and keep the new one when you file? Do you have other assets (property. more than 2 cars or one car and the motorcycle, etc) that you hope to keep as well?

the transfer was for $17000. we have 8 of it left.

Most state exemptions won't protect that much cash in your account on filing day. You may have to spend it down quite a bit on legitimate living expenses before you can file (and keep all the receipts as you do so). Keep all the records and receipts about where the $9K you spent so far went.

this sucks!

You are at one of the hardest times during bankruptcy right now....realizing that you are going to have to file to get out of the financial hole. We've all been there - it's very hard - and we're here to help you get through it too. Keep asking questions - we'll help you as much as we can.

[bxtzd3]

ok sorry. im in pa. old house can vanish into the abyss for all i care, and 2 cars 1 for her 1 for him. we both work full time. i work 125ml one way to new york so we need both. the bike i got in june, when i still thought i would have to find a temp place to live do to the quick sale of my house, and everything was great. i would like to keep it. it shows up as a credit card debt not a auto loan. so if they look at it that way that why i thought if i transfered it to my sis it would be fine but im not possitive.
if i did it right it came to 38,000. the 17 went into the bank. most of it went to the new house payments and car loan.
i plan on using the money for gas and food. easy for reciepts. i want to keep paying all my cards on time to try to save some type of numbers in my report. as of now were not behind. thats why were behind if that makes sense.
its funny how even though you say " that slope is muddy and if i walk on it ill slip"
and then say "ill be carefull and charge right down that slope anyway". well you no how that turns out.

[nc73]

I know how you feel, I'm in the same situation. Bought the new house, put the old one on sale but no bites so I rented it out. Well wouldn't you know it the tenant doesn't pay on time so I have to borrow here and there. I would go ahead and rent that house out but be careful with renters, check them thoroughly. We rushed it and ended up with a deadbeat. If that isn't going to solve your problem, well time to file..

[lrprn]

im in pa.

Thanks for the additional info, bxtzd3!

if i did it right it came to 38,000. the 17 went into the bank.

Right now you're a family of four (you can't count the coming baby until after it is born).

In PA the median income for a family of 4 is $74,072 - http://www.usdoj.gov/ust/eo/bapcpa/2...come_table.htm . Even with the extra $17K you will have to add as income if you file before Feb 1, 2008, you're still under the PA median income for your family size so it's likely you can file Ch 7.

old house can vanish into the abyss for all i care, and 2 cars 1 for her 1 for him. we both work full time. i work 125ml one way to new york so we need both.

Here's a link to the PA bankruptcy exemptions - http://www.bankruptcyinformation.com/PA_exemp.htm . In PA you are also allowed to use the federal exemptions if those are better for you (and I almost guarantee they will be) - http://www.bankruptcyinformation.com/exemp-fed.htm . You have to pick one or the other - you can't mix the two.

the bike i got in june, when i still thought i would have to find a temp place to live do to the quick sale of my house, and everything was great. i would like to keep it. it shows up as a credit card debt not a auto loan. so if they look at it that way that why i thought if i transfered it to my sis it would be fine but im not possitive.

Since you want to keep both cars, it's unlikely your exemptions will protect both cars AND the bike. We need to know the equity you have in all three (true value of each minus what you owe on each) and which exemptions set you will use to tell you for sure.

The bike may have to be considered a secured asset even though you charged it on the Yamaha card - read the fine print on the credit card agreement. As already mentioned, transferring any asset to an insider family member within a year of filing will raise all kinds of red flags. You don't want to go there - that's bankruptcy fraud. Better to resign yourself to surrendering the bike if your exemptions can't protect it.

i want to keep paying all my cards on time to try to save some type of numbers in my report. as of now were not behind. thats why were behind if that makes sense.

Frankly, it makes no financial sense to keep paying on unsecured debt that will be completely wiped out once you file. Use that money to pay your lawyer instead. The last thing you should be worried about right now is your credit rating.

Don't believe the myths. Most Ch 7 filers bounce back and can get loans, mortgages, etc just like they didn't file within two years.

It's time for you to set up free or low-cost initial consultations with 3-4 experienced bankruptcy lawyers in your area. With so many assets involved, you need good legal advice to know what you can protect and what you can't. You'll also get a sense of who you can work with best plus learn a whole lot about what's going to be possible in your situation.

Keep asking questions - we'll help you sort things out as best we can.

[RickInMich]

lrprn,

I'm sorry to jump in here, but I have some questions for you based on your last response. Are cash advances considered income? If so, what about balance transfers? Or cash advances that you got but then wrote a check to pay off another card? Are those considered income?

Also, you said he'd have to include the 17,000 as income. But don't they double the amount when they do the six-month lookback? So, in effect, they'd count that as 34,000 on income?

Thanks for any info. I've got some cash advances and/or balance transfers to deal with, too. We should be filing in two weeks, and I'm just getting nervous about all this.

Rick

[lrprn]

Are cash advances considered income? If so, what about balance transfers? Or cash advances that you got but then wrote a check to pay off another card? Are those considered income?

Rick, the OP in this thread took CASH out against his credit card and put that CASH in his checking account. IN THAT SITUATION, yes, I believe that is counted as income. Still the OP needs to check with his lawyer to make sure that's the case in PA.

Also, you said he'd have to include the 17,000 as income. But don't they double the amount when they do the six-month lookback? So, in effect, they'd count that as 34,000 on income?

That's right. And even with $34K added to their $37K income, they were still under the PA median for a family of four.

Balance transfers don't count as income - they generate no income, just shift debt around.

Ask your lawyer to go through each of the transactions you are worried about and tell you specifically whether they count as income or not. Then you can relax about this

[Hollyhomemaker]

lrprn,


Also, you said he'd have to include the 17,000 as income. But don't they double the amount when they do the six-month lookback? So, in effect, they'd count that as 34,000 on income?

Why would they double the amount?

[nc73]

Why would they double the amount?

That's just to figure out the yearly income, but in reality for the means test it gets divided by 2 anyway so it's back to 17k.

[jp2861]

lrprn,

I'm sorry to jump in here, but I have some questions for you based on your last response. Are cash advances considered income? If so, what about balance transfers? Or cash advances that you got but then wrote a check to pay off another card? Are those considered income?

Also, you said he'd have to include the 17,000 as income. But don't they double the amount when they do the six-month lookback? So, in effect, they'd count that as 34,000 on income?

Thanks for any info. I've got some cash advances and/or balance transfers to deal with, too. We should be filing in two weeks, and I'm just getting nervous about all this.

Rick

I'm with you on this one. If that 17k was a cash advance from a credit card it's debt, not income. That 17K won't be included as income when filing taxes.

[B12]

Cash from a cc was definitely not included as my income.

[bxtzd3]

And even with $34K added to their $37K income, they were still under the PA median for a family of four.


i read it wrong. my income with my wife is more than 34k. but i guess half a year would be 40 plus the 17k so 57k with the 6 month thing and 17k. divided by 6 and multi by12 =112 give or take. i think

is there a way to pay some stuff of whith the filing and the other just pay as normal.

also do you lose the tax return at the end of the year? we dont owe anything to irs now.
i tied the form7 site and cant get on. any idea?

[lrprn]

Ok, everyone who is actively interacting with your lawyer....here's your assignment for the week. Ask if a cash advance from a credit card that is deposited into your checking account as cash counts as income on the Means Test or not. Report back what your lawyer tells you.

Until then, we're all just best-guessing about this and not doing anyone any good. Let's get the facts from the horses' mouths who can give legal advice and resolve this once and for all. I would love to wrong about this one, believe me!