Cashing out a stock portfolio with 35K?

[professorkev]

What about cashing out a stock portfolio with 35K? dO cash it out and then wait 3-6 months to file or do I cash it out the day of filing? I'll be needing that money to pay bills in the future. Don't want the money grubbing banks to get it - aholes made enough off of me in ther high interest rates!

[backtoschool]

What about cashing out a stock portfolio with 35K? dO cash it out and then wait 3-6 months to file or do I cash it out the day of filing? I'll be needing that money to pay bills in the future. Don't want the money grubbing banks to get it - aholes made enough off of me in ther high interest rates!

Cashing out a 35k stock portfolio will give you a 35k non-exempt cash asset for the trustee to take. You will have to wait until you spend it down before filing. If you cash it out and then file immediately, all that cash becomes property of the bankruptcy estate. The stocks would be non-exempt too however, so cashing the stocks out is not making things worse, but you are giving 35k away to the trustee. You will have to cash out the stocks, spend the money on legitimate expenses, and then file.

[professorkev]

so what do you do? wait a year before you file? leave it alone and cash out stock as you use it? are paying back taxes a legit expense? student loans? I guess I can pre pay the proeprty raxes coming due in January and insurances. home mortgage too (but wifes accopunt usually pays all that..

[backtoschool]

so what do you do? wait a year before you file? leave it alone and cash out stock as you use it? are paying back taxes a legit expense? student loans? I guess I can pre pay the proeprty raxes coming due in January and insurances. home mortgage too (but wifes accopunt usually pays all that..

Whether you cash it out and put it in the bank, or leave it as stocks, it is still an asset that the trustee will take if it is not spent by the time you file. Here are some of the ways you can use the money:

1. 5k can be put in your ira which is exempt and will not be taken by the trustee.
2. Property taxes
3. All insurance payments including medical insurance
4. Stock up on food
5. Get any medical treatments that you were planning on for the year done, such as glasses, eye exams, dental work, etc.
6. Legitimate home repairs such as a new furnace, or roof, or windows, etc. Cosmetic home improvements that are not necessary will be questioned by the trustee.

Things you should NOT use the money for:

1. Prepaying or paying unsecured debt such as any credit cards you are "trying to keep". This will be considered preferential payment and will be clawed back by the trustee.

2. Prepaying the student loans, again this probably would be considered a preference although justbroke or HHM might know more about whether it would be allowed since the debt is non-dischargable.

3. Paying money to any relative or friend for any reason. They will end up having to pay the trustee the money back.

4. Going on a trip with the money or buying any "luxury" items with the money.

[dspii]

so what do you do? wait a year before you file? leave it alone and cash out stock as you use it? are paying back taxes a legit expense? student loans? I guess I can pre pay the proeprty raxes coming due in January and insurances. home mortgage too (but wifes accopunt usually pays all that..

As Backtoschool said, if you use it to pay for the things you just mentioned, you might be OK, but be prepared to justify all of the money recieved...it's way too much for the trustee not to investigate. Do you have a lawyer, they could offer excellent advice and devise a strategy for you to use the money and when you should file.

[CreditCretin]

I had to sell some stock in the month prior to filing our BK, but it was only about 2K. I needed the money to make a property tax payment. The attorney advised me to sell it right away and pay the taxes, as it wouldn't be a problem because it was a necessary expense. We did this, and at our 341 as were discussing the stock, I explained that I sold it to pay taxes and the trustee didn't even flinch.

[AngelinaCat]

Hi professorkev: I have moved your post and all of it's replies, into a thread of it's own. Your question was not really related to what the OP of the other thread was asking, so essentially you hijacked that thread. Please refrain from doing that in the future as it is against the rules for posting on this forum. If you have not reviewed the posting rules, please take a few minutes to do so:

http://www.bkforum.com/announcement.php?f=3

Thanks!