Timing a chapter 7

[needachance]

Need some advice here on what you all would suggest. Our attorney told us we have 2 options on when to file and two different schools of thought.

We have a moderately good savings because my husband's employment is seasonal so for 4 months in the winter there is only 400 a week of unemployment so we save a certain amount during the rest of the year, been living on cash a long time. Plus we have about enough for half of our insurance deductible set aside.

The attorney told us there are two options with this.

#1 - Get our son's neurology appt done
Get both kids glasses and dental stuff done
Pay off the orthodontist
Stock up on some things that we can use through the winter like paper products, frozen meat etc
Get oldest son the computer he needs for school this year (doing on line school)
And buy school supplies and clothes
Pay insurance for the next 6 months (due this month anyway)

File now and surrender the rest to the trustee and then start saving right away for winter, which we could do pretty well if we were able to start in September with no credit card payments...

Pros of that are fresh start sooner
Get this out of our hair etc

But the huge con is if we get hit with some expense we didn't expect in the winter or have some huge medical expense, we will be in trouble with minimal money set aside.

Option #2
Use the money to make it through the winter
Get all the medical stuff we need to taken care of
"enjoy life a little" as the attorney said, actually go out to eat
Stop paying the credit cards now
Buy ahead some things for next spring
File in April (would include 4 months of unemployment in the income statements)
Then DH would be starting back to work good hours and good money
Possibly have some visits to family members (like my grandma that I haven't seen in 10+ years) and such during the winter
And save like crazy during the summer to get our emergency fund built back up.

The pros of this one are obvious but the big con on this is just the deal with having creditors calling, having the BK hanging over our heads unfinished, putting things off, and the fresh start is farther away.

So what are people's opinions? I think the attorney is leaning towards option #1, but I don't want to be caught in a terrible problem this winter without an emergency fund either. If something were to happen to my job during the winter, when he is on unemployment, we would be in trouble big time.

[kw1025]

It does not seem like you have any huge unsceured creditor issues right now, which is good. You may want to begin to start missing payments now,but do not stop making payments totally, give them a little something. get the things you really need now, but no luxury items. Just keep it going for a little while, you will have to put up with creditor phone calls and letters at the most. I would buy time, then file.

[kw1025]

or this, get a smll personal loan from a family friend AFTER you file, if you need it for the winter months. That way you get everything done now, and have some savings just in case

[lrprn]

Regretfully no one here has a crystal ball any more powerful than your own.

There's no way to know what's going to happen in the future, so you might as well go with Option 1 and hope for the best. Going for option 2 and stopping unsecured payments now puts April 2010 nine months away. That's enough time for at least one of your unsecured creditors to file with the court to garnish your wages. Not saying it will happen, just that it could. That's carries as much weight as filing now and having something bad happen this winter.

Bottom line is that you are going to have to make a choice and go with it hoping for the best.

[needachance]

Should have included, all of our debt is unsecured. We have 6 different credit cards with balances. That is all we will be bankrupting. 85,000 total. We have not yet missed any payments, we are totally current at this point but will stop payments this month. A small loan from family is absolutely not an option as we will not borrow money from anyone, whether family or not, ever again.

We are at a point where with both our incomes and no payments to credit cards we can easily cover our expenses, except for the 4 months in the winter. Also, we will be able to save a good amount during dear husbands ON season.

Sitting down just now though and figuring our income, I think we would be really close to the median if our "look back" for income included all my husbands busiest months, May-August...so would probably be better in that department to wait as well.

[LuciluS]

Should have included, all of our debt is unsecured. We have 6 different credit cards with balances. That is all we will be bankrupting. 85,000 total. We have not yet missed any payments, we are totally current at this point but will stop payments this month. A small loan from family is absolutely not an option as we will not borrow money from anyone, whether family or not, ever again.

We are at a point where with both our incomes and no payments to credit cards we can easily cover our expenses, except for the 4 months in the winter. Also, we will be able to save a good amount during dear husbands ON season.

Sitting down just now though and figuring our income, I think we would be really close to the median if our "look back" for income included all my husbands busiest months, May-August...so would probably be better in that department to wait as well.

I totally Agree. I would rather be Under our State Median's Income if having the chance to do so and You Do Have That Chance. Least likely to have the UST nosy into your case

We stopped paying most of our credit cards late last Sept. and will be filing 9/09. Yes, got the phone calls and gave them the Attorney's infor & about 3-4 mths later they called back. At the Attorney's advice, he told us not to answer the phone unless we knew who was calling as the Credit Card Cos have his info.

Now all of our accounts have been turned over to Collection Agencies. Have received 3 - 5 forms letters from the CAs & a few from Attornies who are not licensed in our State. They are in a shoebox and need to be sorted & matched with all the Statements. Yesterday got my first offer on a $1,033 card. They want me to pay them $400. Screw em!

I had some monthly income which dropped off in Feb. of this year. So we will be using Mar - Aug 09 Gross Income and filing on 9/30/09 as Attorney is in a small city and files all on the last day of the month.

You would think that I would have my act together and have all the papers needed like Vehicle Registrations, Auto Insurance Policy, Homeowners & Life Insurance Policies, etc. all in the same place. Nada. Got lots of work.

Dh was hospitalized in April..I almost lost him. Late Friday, the insurance company finally processed his $22,000 bill from the hospital. We owe $1,664.89 and that is with insurance. We spend $500 a month in prescriptions needs just to live or have any quality of life.

We are thankful I've managed to pay our house payment and Dh's truck payment each month. But, we have one major medical crisis after another since March 2005.

If you haven't already, get the packet from your Attorney so you can start working on it. I keep different spreadsheets & when I pay a bill, I had it to my spreadsheet. Dh is a long haul truck driver usually gone from Sun am - Fri pm, so lots & lots of little receipts to go thru. I'm disabled, so he does the grocery shopping on his only day off. He buys milk, bread, mayo, mustard, cereal & deli meat to take with hi in the big truck. OMG! It's been a nightmare as he goes to 3 to 4 different Wal-Marts or grocery stores in different towns and figuring the tax is a nightmare.

Luci

[OhioFiler]

Using the four lower earning months in your means test is a good idea. I would suggest you not wait until he gets a good paycheck to file though as then you would be using higher income on your schedule I which could end up making it more challenging to file a Chapter 7 given your statement:

We are at a point where with both our incomes and no payments to credit cards we can easily cover our expenses,

BK planning is a challenge and should not be rushed into. I would suggest you take a good long look at the numbers and your options before deciding.

Dealing with creditors' phone calls would be the last "con" I'd consider when making the decision. They really are insignificant in the scheme of things.

[Trixie007]

A lot of good advice here. The only thing I would add is that to me the major difference between choice 1 & 2 is how you and your family will do with the strain if you wait. If it's going to consume your thoughts and make having a normal life difficult, I would go #1. But, if you can do all the planning, get your plan set up on what you're going to do and then just start living as if that plan is going to work and be great, then I like #2. JMO, waiting seems to have a lot more positives but only if it doesn't cause a lot of emotional grief.

[OhioFiler]

A lot of good advice here. The only thing I would add is that to me the major difference between choice 1 & 2 is how you and your family will do with the strain if you wait. If it's going to consume your thoughts and make having a normal life difficult, I would go #1. But, if you can do all the planning, get your plan set up on what you're going to do and then just start living as if that plan is going to work and be great, then I like #2. JMO, waiting seems to have a lot more positives but only if it doesn't cause a lot of emotional grief.

Trixie, what is this strain you speak of? We are much less strained now that we no longer feel the burden of paying all those credit card bills. The phone calls are hardly a nuisance any longer. Sometimes I wonder why they won't call me any longer.