Savings

[doomed]

My husband and I just did our counseling for Chapter 7 and will be speaking to a lawyer soon.

If some of you may recall, we are in over our heads in debt, to the tune of over $150k. I previously had about $35k in savings. Once I lost my job and our income was severely cut, it was keeping us going. Once my son got sick, we knew that our time was limited. Anyway, we knew there was no getting out of this mess so we basically dumped 25k down the drain trying to stay above water

I want to take this $9k and pay my in-laws back the $4500 we owe them, pay my sons doctor the $2500 that I'm currently in a payment plan for, and the rest for my lawyer.

We haven't filed yet, obviously, so how would this look? Would we have to report that we liquidated our savings to pay these few bills? If I could, I'd pay everyone I owe, but I can't. So I'm thinking family, and the doctor who saved my sons life should at least be paid back.

Any idea how far back in your bank statements they look? Maybe we should liquidate it, pay these debts, and just wait to file?

What do you think?

[ssmdem]

Don't pay your relatives -- the trustee is just going to demand it back. It's an insider payment, and as backwards as it seems - you can't pay them. I'm having to hold off on my filing because of a $1200 payment I made to my mom. There's got to be a year between the payment and filing.

[doomed]

So what do we do with the 9k in savings?? Just hand it over to the trustee?! Or maybe, would this work -- obviously we fell on hard times, and we're renting our house from them. Could we pre-pay our rent to the tune of the money we owe them, or would it still look like insider payment?

I'd really like to pay them back. They bought us the tractor we used to clear our driveway of snow in Maine

[ssmdem]

Find out how much cash can be exempted in your state and get the rest spent on "necessities." Stockpile on groceries and household supplies, any other medical treatments you've been putting off (dental too). I believe $5000 of it can be put into a Roth IRA that can't be touched. Check with your attorney and see what he suggests. I'm having to do the same here.

[ssmdem]

I don't know on the rent question - I'd check with your attorney on that one. I would say it's probably okay if you can prove a past history of renting from them -- but ???

[doomed]

Thanks, I appreciate the answer. How far back in your bank statements do they usually look?

Also, will they deny your chapter 7 if they don't like your spending habits? With all thats been going on, I went through a long phase where I barely paid bills and blew money. Not because I knew we'd file bankruptcy, but because I lost control.. I've tried to get it together recently, but with the foreclosure.... yeah

[ssmdem]

I understand completely - we're there too. Working my tail off trying to keep up with three jobs and consequently probably ate out way more than we should have. I've got us on a strict budget - which by the time we file - will show four months of VERY documented spending.

The lookback on income is six months -- if you're under the median, they probably aren't going to scrutinize the spending too much. And honestly, unless it's MAJOR excess - like lavish vacations, excessive spending sprees, you're probably okay anyway.

Bank accounts, I guess they can look back at least a year - as that's how long the time frame is for reporting insider payments. Probably could look back further if they thought there was a fraud or abuse issue. I think in general, they're only looking at maybe 3-6 months of statements though. Six months is all my attorney asked for anyway.

[josephga]

my mother took out a bank loan for me to the amount of 3500.00 to get my truck with. I didn't give my mother the money back i just made the checkout too the bank each month.
I had 1000.00 left on the loan so i just wrote a checkout for it last week again to the bank.
does this count as a insider payments?

[ssmdem]

my mother took out a bank loan for me to the amount of 3500.00 to get my truck with. I didn't give my mother the money back i just made the checkout too the bank each month.
I had 1000.00 left on the loan so i just wrote a checkout for it last week again to the bank.
does this count as a insider payments?

If your name is on the loan as well, shouldn't be an issue. But if it's not - I really don't know how that would work.

[josephga]

nope my name wasn't on the loan. she took out the loan, then gave me the payment book. each month i made a payment too the bank. i haven't filed yet because i wasn't sure how long i should wait..

[ssmdem]

I really don't know how a trustee would look at that. Your attorney would be the best one to ask how it would be treated. That's a tough one. ???

[doomed]

I would think the trustee would be okay with it? Obviously, he can provide the bank statements and cancelled checks to show that the checks were written out SPECIFICALLY to the bank for this SPECIFIC loan number. Unlike my case.

[doomed]

Well I talked to a lawyer today and i'm confused. He's saying they won't even look at my bank statements.. wtf, why wouldn't they? And if not, how woudl they know I paid my in laws back (insider payment?)

[ssmdem]

There's alot of things with bankruptcy that you COULD get by on, but if you don't disclose them and they find out........ I just wouldn't want to run the risk. One attorney I talked to also said, "Oh, we just won't mention that. It's unlikely they'll find out." I just didn't feel comfortable with that. The attorney I am using is also a trustee as well, and that was the first question she asked when she saw my parents name as a creditor. Your attorney is going to know what the trustees in your area typically ask for -- just know that they CAN require you to pay that back if they find out about it.

[doomed]

Thanks. I'm going to hold off on paying them back. I mean, its not like we've been using our credit cards. Those have been closed for a long time. The only thing they'd see if they checked our bank statements, is that we apparently make more than we'd be stating, ebcause I was constantly transferring money over from savings to make ends meet (and more, because I'm an idiot).