New at this, need advice.....

[tryingtomakeit]

Hi Everyone,

I have some questions before I actually file. I saw a lawyer today and she said to stop paying my credit cards and anything I don't want to keep and to wait 90 days before filing. She said we qualify for Chapter 7 and to not make any luxury purchases until then. What exactly is considered a luxury purchase? I have a few things that we need to buy and want to roll it in. Our tv died 2 weeks ago, my kids need a new bed since they are sleeping on mattresses on the floor, and my dog desperately needs shots. She said they only go back typically 90 days, but could go back further and if all of a sudden I made these purchases and stop paying, won't that look odd?

If I make the purchases, which won't be 5k or anything like that, should I pay the bills another month, of which I'm just moving money from one credit card to another or to the mortgage, wait another 90 days and then file? I'm up to date on all my bills as of right now, again, the whole cash advance from one card to the next and back and forth. Then it may look like I intended to pay it back and then said forget it, I give up and filed BK?

Here's my nutshell finances.....
Amex- $22000
Discover $6500
Care Credit-$1600
Lowes $1k
Rental property- What a fiasco!
2 vehicles- upside down on both-want to keep
1 main home- way upside down- want to keep

Any advise would be appreciated!

[AngelinaCat]

Hi, welcome to the forum. Your attorney's advice sounds right, but many people, my husband and I included, had been advised to wait at least 180 days (6 months) before filing.

A luxury item is a considered to be 'big ticket' meaning it costs thousands of dollars, say for a hi-def TV plasma screen that covers the entire wall. That is an over-the-top example, but will give you an idea. A rule of thumb that I've seen other posters use is to keep any one expenditure under $600.00. And that to me even seems to be too high.

Since your TV is broken, why not go to a Goodwill and see what they have? We purchased a nice used one for $35.00 a few years ago. The only problem there is that in February or March of next year, all the television signals will be switched from analog to digital. You may need to purchase new to make sure it is capable for the conversion. You can find some nice sets reasonably priced at Wal*Mart or one of the other electronics or big box stores. You may be able to find sales closer to the end of the year as the conversion date draws nearer.

On the children's beds, I would look at a used furniture store, or several. We purchased a nice solid wood--and very sturdy--twin bunk bed set for $100.00 last year. We did not need the bunk feature, but needed two twins, so they are set up as stand-alones, with one in one room, and the other in another.

For the dog, talk to your vet's office and see what they can do for you. I have three cats--one being especially flea allergic--and had been trying to get a better deal for their Advantage flea control, than I could get at the vet, and couldn't do it.

Good luck to you.

[ssdsco]

2 vehicles- upside down on both-want to keep
1 main home- way upside down- want to keep

Any advise would be appreciated!

You should come up with a plan to let any upside down property go. At the very least don't reaffirm the loans.

[TEW]

You should come up with a plan to let any upside down property go. At the very least don't reaffirm the loans.

I second that but the house may come back. I'd dump the cars since they will only get worse.

[AngelinaCat]

Ssdsco is correct. Keep making the payments if you are able to. If you can't, then you can let the item(s) go.

But, if you reaffirm the loan(s) and then cannot keep making the payments, you will be stuck with the difference.

[albacore44]

My attorney

My attorney suggested I buy a new car and I could and dispose of my existing car by including it in the items going back to the bank. sounds wierd, to me but I understand the concept. He said I quailfied for chapter 13 due to the means test and my income, but since my existing car loan would be paid off in a year, they would increase my chapter 13 payments. I am still trying to figure out if I can somehow pass the means test to file chapter 7. the numbers are very close.

[b_girl]

What exactly is considered a luxury purchase?

I seem to remember seeing $500+ given as the upper limit when it came to this question in the past.

When you stop paying the CCs, how much money will it free up monthly? I would use those funds to buy the items you need, since you can't let the money build up anyway. As long as they're not high ticket, you should be fine.

Just note that you do have to stop using the CCs 90 days before filing or otherwise it may cause you problems.

[StartingOver08]

I just filed CH 7 two weeks ago and in my district if you spent $500 on a credit card for one item that was considered luxury. For making payments the trustee is looking for any check in the amount of $600 or more. Also they wanted to know if I made any payments for more than the minimum - or paid down anything faster (for example paid down one card more than the minimum but did not pay others).

They look for preferencial treatment (not a good thing). That is probably why your attorney said to not pay on all the credit cards for at least 90 days.
Its that 90/70 day rule. Also do not do balance transfers at all.

As to the TV - go to Walmart - they have good TV's for $100. Or you could try Craigs list. Don't charge your new items unless you get at least 90 days between the new charges and the filing and six months is better. If you make a charge, pay on it - but cash is really better now that you are in this situation with the rest of us