Moving Forward, CC Usage?

[rck3]

So I think we have deceided to move forward. I spoke with another lawyer today and the wife and I will talk it over this weekend. I think we are 90% sure.

We have some money saved to cover the fees, I was wondering about CC usage. Obviously if we feel BK is the best option we will stop use and have not used it the last few days as we became aware this is where we are headed. I read things that you need to wait 90 days from your last charge? Is that correct? If so then I will need to wait 3 months to file?

I cant believe that is the case. I can understand the fraud issue but even as of 2 weeks ago I was not considering this at all. I had been hoping that my work would increase or my wife's business would pick up during her slow time. This week I looked everthign over and realized I can either keep hoping till we are months beind on our payments or take action now. So we are going to take action, but I'm worried about what we've spend the last few months to keep our payments on time. Basically we spend nothing more than $200 at a time and maybe $1500/month to cover bills/gas/food so we could use cash to pay the bills.

[rpertusio]

No, you don't have to wait the 90 days. It is beneficial if you do, though.

We used our last credit card 5 weeks before we filed, having no intention of filing at that point.

Assuming you're going to file... stop paying your credit card bills now and save the money for your lawyer fees and your necessary expenses.

If you use your card for something in the last 90 days that is considered 'luxury', then you might have to give it up. (For instance, buying a new $800 TV on your card would be a no-no.) You could either wait 90 days until the TV purchase falls outside the 90 day window, or file anyway. You may have to give up your TV. Usually the magic number is "$600". A $240 car repair might not count, for example.

Yes, you can still have problems with your 'new TV' on day 91, 92, 190, 300, etc... but it's less likely (and not presumed to be abuse) after the 90 days.

The rule is to stop people from charging $5,000 of stuff before they file, KNOWING that they won't have to pay it back.

The other thing to remember is that if you pay a creditor within 90 days prior to filing, it could be considered a 'preferential payment'. So, that's even MORE reason to stop paying your cards/loans/etc. Usually it's something like $600 (total) to any creditor paid within the last 90 days. (If you paid $800 to your Chase credit card, the trustee could take it and re-distribute it to your other cards. Nothing will come out of YOUR pocket.) If you paid your mom/dad for a personal loan (let's say $900), the trustee could come take the $900 from them! This might be another reason to wait 90 days.

Hope that helps!
- rp

[rck3]

Thanks, yes that helps alot. We have not spend anything on luxury items the last few months. I was even worried and looked back at the last year to only find about 4 buys over $500 and all but 1 was for car repairs or issues like that. There was one for a nice tv and a bunch of gifts at christmas that totaled about $1800 but it's almost 6 months. Actually we only spent that much as people give us cash to buy gifts for us and the kids instead of shipping something.

We have a ton of debt but it is all spread out so our largest payment is only $400. I assume the mortgage payment doesnt count though?

[jamiedavidg]

I had a different experience. I'm in CA, and my attorney made sure that we hadn't charged anything in the last 90 days. A family friend of ours filed BK a few months back, and they had charged some things recently (food) and the attorney had them wait to file. I've read that at some 341 hearings, the trustee will ask when was the last time you charged something, or, if you've used any type of credit within the last 90 days. Perhaps we are in the minority though, just sharing my experience.

Good luck

[rck3]

Well I'll be stopping now, I want to be honest and upfront. I don't want to wait another 90 days though. I can't see them holding it against us. I can honestly show that we had no intention of BK until now. I even paid $400 last week to a card with a $15 min payment to almost pay it off. We only use 1 card and I just paid that min balance last week too. Had I known, I would have skipped them.

[rpertusio]

Lawyers will recommend different things. It is *much* easier to file after 90 days. But, if you really think filing now would be beneficial, then do it! No need to prolong the agony.

The only charges on your cards within the last 90 days should be 'necessities' for living. For example, $100 to buy groceries. (Keep the receipt.) I am NOT suggesting you purposefully go out and use the cards, but some people really have no choice.

You have to think though... Let's say you NEED groceries and you don't have $100 cash, then maybe you shouldn't file. After all, if you can't find $100, then you'll REALLY be in trouble once you file BK and your cards are all closed.

Once filed, you must work with the cash you have. If you can't meet your needs with the cash you'll have saved up, then wait to file. Save the $ you would normally have paid for card payments and live off it.

My answer is to file regardless of the 90 days if it makes sense for you to do so. We did, and our case has gone smoothly so far. We stopped using our cards 2 days before we saw our first attorney (consultation) and filed ~1 month later. We also skipped our first CC/Loan payments once we made the decision to file.

- rp

[rck3]

Thanks again, yeah we have cash saved to cover and w/out the CC payments we are positive $500-1000 each month which we will use for food and basics. We have a few thousand saved to supplement and after BK I'll look into another job or hope for some OT from my current job which is usually more available in the fall time.