New here - Question re: minimum payments to cc and charges to card before filing

[diggy]

Hi All

I just filed pro se today.

My situation: In the past 90 days I have made minimum payments to my CCs with the exception of Amex and Corp Amex where the monthly payments were much larger ranging from $600 - 5000. I am also 3 months behind on mortgage payments but am current on my car payments (with help of mom). My house has been on the market (short sale) for 9 months now. The value has dropped 60% from what I owe. I have no equity. The bank will not accept any of the offers that have come in. I requested deed-in-lieu of foreclosure and they declined. So I'm stuck. I'm literally being forced into foreclosure. In the past 6 months I have had a friend stay at the house and she paid what she could in rent (no formal lease drawn up and I didn't count that as income on my statement bec I knew it would end) but the rent did not cover the entire cost of my mortgage or any other expenses so I had to pay for the difference. My mother has also been helping me with car payments for the past 6 mnths. To top this off, I had to relocate to NYC last year or be out of a job which meant taking on the extra expense of a rental on top of my mortgage payments!...While I make $100K a year, I literally have been getting by (at the end of the day I had maybe $50 for groceries, IF that!). If it were not for the help of my mother and the friend (who is now moving out hence no more help with mortgage and now the impending foreclosure) I would have been operating in the negative and probably been in foreclosure much sooner...so I filed Chapt 7 in order to protect myself as I have a feeling that the 2nd mortgage will likely try to get a deficiency judgement against me and frankly I am ready to surrender the property given that I am now in NYC full time.... My 341 is set for late Sept.

What I'm more concerned about is the trustee's meeting. Are there red flags to my situation above that I need to be concerned about? I did have to make a $700 of clothing back in July on one card (for work! Hadn't bought new clothes for a very long time but literally NEEDED to! Could somethin small like this be seen as BK fraud?)...Am I frettng for nothing over small things? So sorry, I literally have had no sleep since I filed and am afraid i won't be sleeping until the 341 meeting!

For those of you who already had your trustee meeting, how did it go? Did you find yourself more worried over nothing?

[backtoschool]

Hi Diggy,

I lived and worked in nyc for ten years and just moved back to the midwest in January so I know how expensive nyc is. I left nyc when I got laid off because i just didn't want to have that huge expense structure any more.

Any charges over $500 or so made within a month of filing will be looked at closely by the trustee, but will not necessarily be presumed abuse as long as you have receipts and an explanation of the charges. Clothes are not luxury items unless you went wild at the Gucci store.

What is a bigger problem is the larger payment to your personal amex. That will be seen as preferential payment, and the trustee may go after amex to get the money back. This should not concern you though, since you are giving up the card anyway.

New York trustees are tough on high income filers though. I know this from personal experience. I wanted to file for chapter 7 before I lost my job, and I met the means test because of my huge debt load and expense structure, but my lawyer at the time told me that trustees really try to push high income filers (ie, over the median filers) into chapter 13. A chapter 13 would have been too expensive for me, so I ended up not filing until I got laid off.

I think that the fact that you were getting assistance for the mortgage won't be an issue as long as you were not trying to claim the full mortgage amount as an expense. (ie, are you claiming the amount after your friend's payment, or are you claiming the full amount?) If you are claiming the full mortgage amount as an expense and not claiming any of the money your subletter was giving you, that will definitely be a huge red flag with the trustee and will be a presumption of abuse.

[diggy]

the issue is that the money my sublettor was giving me was not a "set" amount so frankly I had no idea what she would give me one month to the next or if she could give anything at all. So I DID claim the full mortgage amount especially since I didn't know how long she would stay at the property - there was a time when I got no payment from her hence it caused me to be two months behind on my own property. How could I count her money as income or say that I was depending on her money when technically I could not (there was also no lease drawn up - it was more me letting her stay there as a favor and her giving me what she could to help offset costs)? Should I find a way to amend this some how? Will they let me at this point given I filed today? What is the best way to explain this to the trustee?

[backtoschool]

the issue is that the money my sublettor was giving me was not a "set" amount so frankly I had no idea what she would give me one month to the next or if she could give anything at all. So I DID claim the full mortgage amount especially since I didn't know how long she would stay at the property - there was a time when I got no payment from her hence it caused me to be two months behind on my own property. How could I count her money as income or say that I was depending on her money when technically I could not (there was also no lease drawn up - it was more me letting her stay there as a favor and her giving me what she could to help offset costs)? Should I find a way to amend this some how? Will they let me at this point given I filed today? What is the best way to explain this to the trustee?

Well, the trustee is going to look at six months minimum of bank statements. If that money from your friend was coming in regularly, it might be noted as income and your schedule will be adjusted. Then again, if it was only small amounts, it might not. I think it is definitely a red flag though. Are you significantly over the median for your six month look back period? (ie, did you make 100k for most of that time?) If you are a high income chapter 7 filer, in nyc they look more closely at your bank accounts and expenses. This is what my nyc lawyer told me last year, when I thought about filing.

Only you know how much your friend gave you and how big a percentage of your mortgage costs, the money covered. If it is a significant percentage, over the course of time that your friend stayed at your house, then the trustee is definitely going to see a presumption of abuse, since you didn't put that money in your schedules as income. The trustee does not want you to take a full expense (your mortgage) that you got partial rent for.

Rent is income. I would put the rent on your schedules.

[diggy]

Good point. I think I will put the rent in as income and adjust accordingly. I assume I will need to do this on the financial statement and also redo the means test? Or only on the financial statement?

My yearly salary is 100K meaning between today and back 6 months I made maybe 68K gross YTD.

[backtoschool]

Good point. I think I will put the rent in as income and adjust accordingly. I assume I will need to do this on the financial statement and also redo the means test? Or only on the financial statement?

My yearly salary is 100K meaning between today and back 6 months I made maybe 68K gross YTD.

What is your family size? If you are making 100k and are single, that is way above the median and your expenses and bank accounts, etc will be looked at very closely by the trustee.

You should redo the means test and the financial statement, since you are adding income.

[Pizza]

Your situation, mainly in relation to the mortgage, is rather unique, so my first thought is why on earth you filed pro se... ... but what's done is done, so as mentioned by backtoschool, the clothes shouldn't come back to haunt you, because they're generally not luxuries. The preferential payment shouldn't matter since you're not the one who received the preferential payment.

Just be prepared to give an appropriate explanation for both actions in case they come up.

[diggy]

I am making $100K but live with my friend and his daughter so I had put down 3 for the household.

[diggy]

Your situation, mainly in relation to the mortgage, is rather unique, so my first thought is why on earth you filed pro se... ... but what's done is done, so as mentioned by backtoschool, the clothes shouldn't come back to haunt you, because they're generally not luxuries. The preferential payment shouldn't matter since you're not the one who received the preferential payment.

Just be prepared to give an appropriate explanation for both actions in case they come up.

I filed pro se because I thought my situation is pretty cut and dried. I'm essentially losing my house in CA to foreclosure and in high CC debt due to maintaning this home as well as living in NYC for work. I don't want the house or need it anymore so I'm surrendering it. Simply put, I can't afford the home and it is the house that is literally causing me to go broke. I could probably scrape up some money for an attorney but Manhattan attys are pretty expensive.

Pizza - what is it that you find unsure about the mortgage situation that causes you to wonder why I would file pro se?

[backtoschool]

I am making $100K but live with my friend and his daughter so I had put down 3 for the household.

Do you claim your friend and his daughter as exemptions on your income taxes? You will have to furnish two years of income tax returns to the trustee and if these people are not on your tax return as exemptions, that could be an issue for the trustee.

If you don't claim your friend and his daughter on your income taxes as exemptions, then you will need a LOT of receipts and bank statements and paperwork to show that you are paying ALL the living expenses of your friend and his daughter. If you cannot show this again, the presumption of abuse may arise, since you will be considered a single household, not a family of three.

[diggy]

Oh lord! I do not claim them on my income taxes and I think I misunderstood the question. Okay MOST definitely will redo/amend the means test to show only myself, as well as the financial statement given this seems to be the most important part that I need to take care of. And I think I'm going to need to retain an attorney to look these over before I submit them. Feel free to send my your NYC attorney if you'd like to refer them!

[backtoschool]

Oh lord! I do not claim them on my income taxes and I think I misunderstood the question. Okay MOST definitely will redo/amend the means test to show only myself, as well as the financial statement given this seems to be the most important part that I need to take care of. And I think I'm going to need to retain an attorney to look these over before I submit them. Feel free to send my your NYC attorney if you'd like to refer them!

Just to be clear, income tax exemption status is the standard that tough trustees hold filers to as a rule, but if you include both the income and the expenses of your friend then you can include them, but will need a bunch of receipts, etc to show what their contribution to the household expenses are. Again, you would have to include both the income and the expense of your friend, not just the expenses.

[Pizza]

Pizza - what is it that you find unsure about the mortgage situation that causes you to wonder why I would file pro se?

Deficiencies in home values aren't for the faint of heart... there can be negative tax consequences involved (HUGE ones) if you surrender the home and the bank sells it for less that what is owed. Then there's the roommate situation (considered rental income?), some 'gifts' (?) from family members, a second mortgage involved, a seemingly high income (I assume you were somehow still able to file the means test?). And you didn't have any problem filing pro se with all that?? Wow.. impressive to say the least.

But the two items that you actually were worried about are likely non-issues, so you'll probably be just fine.

[diggy]

Deficiencies in home values aren't for the faint of heart... there can be negative tax consequences involved (HUGE ones) if you surrender the home and the bank sells it for less that what is owed. Then there's the roommate situation (considered rental income?), some 'gifts' (?) from family members, a second mortgage involved, a seemingly high income (I assume you were somehow still able to file the means test?). And you didn't have any problem filing pro se with all that?? Wow.. impressive to say the least.

But the two items that you actually were worried about are likely non-issues, so you'll probably be just fine.

No deficiencies in home values are NOt for the faint at heart but I'm also NOt the first in this nation to come across it. As far the tax consequences, I would likely fall under the Mortgage Forgiveness Debt Relief Act ... http://www.irs.gov/individuals/artic...179414,00.html
I plan to surrender the house but it's already in foreclosure.

As for the friend who is subletting, I will have to amend my financal statement, etc to include that income. My mother helping pay for my car is not a gift - it's just her helping and this will be made into the amendment as well. I'm sure I will not be the first who gets help from family to get by.

And as for $100k in NYC for a single person... if you've never lived here you don't know what the cost of living is so please don't judge. A tiny 400 sq foot studio costs $2500-3000 a month. That is the cost of my mortgage alone... how I have floated all these expenses for the past two years is beyond me but I've managed to do it - mostly paying from my savings, some help from mom...Like I said if I didn't have this help and the rental income, I would be operating in the negative every month... foreclosure would've happened sooner and I'd probably be worse off.

Your tone, Pizza, is really not helping.

[backtoschool]

No deficiencies in home values are NOt for the faint at heart but I'm also NOt the first in this nation to come across it. As far the tax consequences, I would likely fall under the Mortgage Forgiveness Debt Relief Act ... http://www.irs.gov/individuals/artic...179414,00.html
I plan to surrender the house but it's already in foreclosure.

As for the friend who is subletting, I will have to amend my financal statement, etc to include that income. My mother helping pay for my car is not a gift - it's just her helping and this will be made into the amendment as well. I'm sure I will not be the first who gets help from family to get by.

And as for $100k in NYC for a single person... if you've never lived here you don't know what the cost of living is so please don't judge. A tiny 400 sq foot studio costs $2500-3000 a month. That is the cost of my mortgage alone... how I have floated all these expenses for the past two years is beyond me but I've managed to do it - mostly paying from my savings, some help from mom...Like I said if I didn't have this help and the rental income, I would be operating in the negative every month... foreclosure would've happened sooner and I'd probably be worse off.

Your tone, Pizza, is really not helping.

Anyone who has lived in nyc knows that 100k is not a high wage there.

Most people who file for bankruptcy get help from family and friends before they file. Most trustees will hold you to the irs $13,000 gift standard, ie, the first $13,000 of cash gifts are not counted as income.

The super high cost of nyc is one of the reasons that I moved back to the midwest. My living expenses are actually ONE FIFTH what they were in nyc.