My head is going to explode- please clarify on cash assets

[hopefulbk]

Another post was talking about extra money they would have in the bank if they stopped paying on their mortgage (and maybe other bills). Let's just say I'd have an extra 9K sitting in the bank because I wasn't paying my bills up until bk.
I believe my state only lets you have 1K in cash at the time of filing. I don't know if I have 8K worth of expenses coming up (that isn't already accounted for such as food and utilities). I know I could buy some clothes for my kids, I could get my dental work done (which would be a few thousand) but I also will need a car if I surrender ours. We are only allowed 1K in equity in a car too~ can I even find a running car at 1K? We also need a cushion for our new place (deposit, first and last months rent once our house is taken).

I think spending on stuff we need is just not in my mindset right now. I've been so strict for so long on what we can or can't buy that I can't justify spending on things we need- just because we need them doesn't mean we can't go without them. Do you know what I mean? Since I won't have credit to fall on, it's scary not having anything in the bank in case I lose my job.

[NeedNewStart]

Hopefulbk,

I'm in the same boat. I also have about $7000 I need to get rid of (tax return) and I just can't bring myself spend it!!!

[AngelinaCatHub]

Another post was talking about extra money they would have in the bank if they stopped paying on their mortgage (and maybe other bills). Let's just say I'd have an extra 9K sitting in the bank because I wasn't paying my bills up until bk. Would you rather just give it away?
I believe my state only lets you have 1K in cash at the time of filing. I don't know if I have 8K worth of expenses coming up (that isn't already accounted for such as food and utilities). I know I could buy some clothes for my kids, I could get my dental work done (which would be a few thousand) but I also will need a car if I surrender ours. We are only allowed 1K in equity in a car too~ can I even find a running car at 1K? We also need a cushion for our new place (deposit, first and last months rent once our house is taken). Now is the time to do all those things you listed. They are all exempt stuff. However, put as much time between your purhases and your filing.

I think spending on stuff we need is just not in my mindset right now. Understand this. But either spend it on essentials or give it to your new Trustee.I've been so strict for so long on what we can or can't buy that I can't justify spending on things we need- just because we need them doesn't mean we can't go without them. Do you know what I mean? I know what you mean, but don't the kids wear out clothes? Pay your rent in advance and yes you can find a running car for 1K, but you can find some real buys for about 2.5K and you may have some exemptions that you could credit to the difference.Since I won't have credit to fall on, it's scary not having anything in the bank in case I lose my job.

I hope this helps. 'Hub

[StartingOver08]

Also, remember this, although it is very scary thinking about spending the money and not having money in savings when you file; filing BK will solve the debt issue so that as your income comes in AFTER the filing date you can immediately begin to save because you will not be servicing the debt. Filing BK is part of a long term plan. Part of that plan is making sure you have transportation that is reliable, but not expensive. Since you are filing a Ch 7 you are going to need about $3000 just for the attorney and filing fees.

As to the house, if you are surrendering the house, you may have many months in the house before you actually have to leave. This will give you the opportunity to save for first, last and security. But, check with your attorney. Some of these Trustees are asking the debtor to move out of the house within 30 days of the 341. I have seen it both ways in my district (Southern District of FL). Your attorney will know which way the Trustee's in your district are handling the matter.

[lalap123]

As to spending down tax refund money...can you go out and purchase gift cards or Visa gift cards over several months time to have if an emergency arises after filing? In my circumstance, I was using cash advances to pay my minimums so just stopping the credit card payments really doesn't put any money back into my pocket. I hate to go around without anything to fall back on, and if the cards are purchased at $50 here and there over four or five months will it look bad to the trustee? I could even do it at the grocery store, as ours has a rack full of them near the front.

The only thing I wonder is if gift cards are part of what you should disclose as assets when the time comes to complete the BK paperwork??

[StartingOver08]

You will see on the petition a spot for gifts. You are supposed to declare gift cards. BTW, I don't know how a gift card could be tracked if it was purchased by cash and not thru debit cards. But then again, I am not as smart as the Trustees are! However, remember, at the 341 you are under oath and you attest to everything in the petition being true and correct.

[jeb]

Hopeful, let me guess - you live in Florida, right?

Florida is a true "fresh start" state - like being born again, with nothing (or very little) to start with. - jb

[OhioFiler]

What did you do with last year's tax refund or any other "windfall" of cash? It can't be that difficult to find necessary expenditures for the family or home.

Most of us with larger refunds would use that money to pay debt. Well instead of paying debt this time pay for those things you would have bought on the credit card. Kids need new bikes? New clothes? Tired of that rust spot on the car? Is that refrigerator too old to be Energy Star rated? Is your freezer clamoring for you to fill it with a side of beef? Are you tired of those old windows in the house? Is your furnance 20 years old and inefficient? How long have you really wanted to get your teeth fixed?

I'm in the process of completing our bathroom remodel, something we've needed to do for along time. This time I'm not using the Bank of Lowes to finance it!

[HHM]

When it comes to spending down cash, you do need to be a little careful, there is still a distinction between luxury and necessity that the court draws when a person "intentionally dissipates" assets of the BK estate before filing (e.g. spending down a tax refund). For example, home "repairs" are ok, home "improvement" could get you into trouble. Getting new brakes on your car is ok, installing a new DVD Player/Navigation System, not ok.

Also, be sure to keep receipts of everything. Also, if you are going to spend it on your home, be sure to take before and after photos.

[NeedNewStart]

What if you spend the cash on whatever you want and wait a year to file.

[HHM]

What if you spend the cash on whatever you want and wait a year to file.

You could do that, but practically speaking, most people are not in a position to wait a year and unless you have a really really good reason to wait (but when you really think about, there are very few reasons that would be good enough), why prolong your financial recovery for a year.

[NeedNewStart]

Yes but if are in the position to wait it would be okay to just do whatever you want with the money as long as you wait a year. Is that correct?

[HHM]

Yes but if are in the position to wait it would be okay to just do whatever you want with the money as long as you wait a year. Is that correct?

There is always "some" risk no matter how long you wait, but 1 year is a pretty good cut off. When you start going out a year, the risk becomes situation specific. Your risk depends on factors such as whether you are insolvent "now", how you spent the money, how much money was involved, etc. But for the most part, after a year, the risk would be very low.

[Vanda]

I wish I had found this forum before I filed! I spent cash on my grandson's birthday party, I paid cash to the handyman to do house repairs, I just blew the cash and now I can't account for it, for example, took a cash advance when my sister was visiting to be able to take her sightseeing, never realizing (duh) I would have to account for this. I feel like a child and I am in my 50's. Well, I guess the sudden drop in my income is not the only reason I am in this situation!

[lalap123]

Another quick questions...say you've made these kinds of mistakes - the kind you can't take back. What options would the trustee have to exercise? Would he or she most likely dismiss the case or just ask you to repay that amount into the estate? I don't know how or why they would do this for small amounts of cash, because it's my understanding that they don't have time or desire to pick apart your bank statements. I thought they were only looking for large assets that you might have purchased (say over $500??), and if they don't see that they won't do much else.

In other words, I cashed in a large retirement fund last summer and ended up getting around $18K. In my stupid attempt to pay off all of my debt I spent about $14K paying on my cards, but the rest ended up going to who knows what. Some was on living expenses but some was on non-essential stuff like designer fabric to make clothes for the kids, a new lampshade for my living room, eating out, etc. I no longer have receipts b/c I didn't know at the time I would be filing.

Since I'm not planning on filing until this September maybe the trustee won't worry about it, but it is on my tax return this year so he's bound to see it.