Checking account help!!!

[superrrdaveee]

Hey guys/gals! New to this forum and had a quick question to ask. I'm going to file chapter 7 soon and I was wondering what would happen to my bank account? I recently filed for my taxes about 2 weeks ago and got back 3,800. Started saving once I knew I was going to file. I have about 8,000 saved up now. I have people that I owe for helping me with my mortgage and other bills, so pretty much the money is spent. If I had taken most of that money out of the account to pay the people I owe, will the trustees investigate that? And would that be a problem?

[CATCHMEIFYOUCAN]

Welcome! If you have credit cards with the same bank, they can take that money out and apply to the balance you owe on their credit cards (called cross collateralization). Also if you pay back those people that you owe (depending on the sum) the Trustee very will likely go after them for the money back! I know that a certain amount of savings is exempt (not that I had $5000 in my account - but I was allowed $5000 IF I had it: state of Virginia). You'll need at least $2000 grand to file Ch7 depending on which lawyer you decide to choose. Others will chime in soon to lend their experience!

Best to you and good luck, Catchmeifyoucan

[superrrdaveee]

Thanks CATCHMEIFYOUCAN. Anybody that can give me some more info would be appreciated.

[keepmine]

You need to find out how much cash can be exempted in your state.
Don't start paying friends and relatives and then file bk. Those will very likely be considered preference payments and the trustee could sue the receipents to get the money back.
You gotta think this thing out. Have you spoken with any bk lawyers?

[superrrdaveee]

I only had a quick phone consultation, but I'm going to speak with some other lawyers next week.

[lrprn]

I have about 8,000 saved up now. I have people that I owe for helping me with my mortgage and other bills, so pretty much the money is spent. If I had taken most of that money out of the account to pay the people I owe, will the trustees investigate that? And would that be a problem?

You can pay each friend and family member you owe up to $600 each during the three months before you file, but if you pay any individual more than $600 then that is a preferential payment. The trustee can come after that money and get it back from whoever you paid. I'm sure you don't want that to happen.

As Keepmine said, you need to know how much of your saved $8000 can be protected if you file. That depends on your state's bankruptcy exemptions. Which state do you live in?

[JRScott]

LRPRN is right.

Please read what I wrote in your other thread about your house.

Don't be hasty to file the bankruptcy.

How much debt do you have?
How much of it is secured?
How much of it is unsecured?
Are any of your debts unable to be released in a bankruptcy?

I got the impression from your other thread that your principle debt was the house, but I could be wrong. If that's the case you might.

In the State of Florida if I'm correct you don't have a wild card exemption you only have a personal property exemption which probably could be taken as cash. But that's only 1000 dollars.

As I said in the other thread if your debt is primarily in the house then I'd try a short sell. If the house has dropped as much as you say the Bank may well take a short sell rather than foreclosing on the property. It is something you might want to look at.

Also keep in mind that once you file I wouldn't move immediately as you have to attend your 341 meeting or your case will be dismissed.

[FreshLikeADaisy]

Florida has a $4000 wildcard from *unused* homestead exemption that can be added to the $1000 personal property and $1000 motor vehicle exemptions... but only if you're not keeping the house.

If you're keeping the house, then you have a great deal of homestead exemption to use toward your equity, unlimited if you've been there over two years (IIRC) but only $1000 personal property and $1000 motor vehicle.

The other thing that the OP can do is consult with the attys about converting/using some of that saved cash prior to filing: for instance, paying off an atty is considered a legitimate expense, as are paying non-dischargeable debt such as taxes, student loans, etc.

But if you're in FL, you are going to have to bring that balance down to almost nothing before you file. The exemptions are very small here, except for those people with lots of home equity that also meet residency requirements. Good luck!!!