Credit Card Charges - pre filing~ allowed?

[ozarkmiss]

We've been building our homestead - with cash - this year. My state has VERY generous homestead exemptions. I've got three cards and told my atty I have not used them at all in +6 months. Was just reviewing the statements and there are two glaring charges to Sears - about 4 months ago. $900 each for appliances for the homestead. (I forgot!) We haven't filed yet but are gearing up to.

So what is the time limit? 90 days or 6 months? Maybe covered under the homestead expemtion. I'll have to ask atty.

TIA
:-)

[backtoschool]

Using your cards up to 90 days before filing can get the charges dismissed and non-dischargable if the creditor files an ap (which they probably will not do for 900 dollars however). But....trustees look very unfavorably on homestead improvements right before filing that increase the value of the home. It is considered bad faith and is a red flag for the trustee and the US Trustee if you are anywhere close to being over the median. The longer you can wait on those charges and pay a bit off on them so that it does not look like you bought new appliances to improve your exempt home and then filed, the better. Six months minimum would be advisable, more if possible.

[ozarkmiss]

Appreciate your help B2S.

Guess it's back to the drawing board for me.

May I ask if I go ahead and file (without waiting a few more months) if worst case scenario is having to pay that $1800 post discharge or is it possible that the petition is dismissed?

[backtoschool]

Appreciate your help B2S.

Guess it's back to the drawing board for me.

May I ask if I go ahead and file (without waiting a few more months) if worst case scenario is having to pay that $1800 post discharge or is it possible that the petition is dismissed?

If you have made a lot of improvements to your home in the last six months and are bking a lot of unsecured debt while raising the value of your home because it is included in a generous homestead exemption, then you would be at risk for a totality of circumstances or bad faith dismissal. But the improvements would have to be more than a couple of appliances totaling less that $2,000.

If you only put the appliances in, (which will have to be exempted under household goods sepearately), then you are looking at a possible (but not probable, given the relatively low dollar amount) ap filed by your creditors for the $1,800, and it would be fine to file now as long as you are willing to take that risk.

Did you make other improvements to the home in the last year or so?

[SunkShip]

Most likely worst case is being made to pay the $1800 post discharge. That is not 100%, but it is most likely.

[AngelinaCatHub]

RE: B2S, If it were me as a Trustee, I would see.....Hmmmmm building a house in cash, buying appliences about 3,4 months ago, new homestead exemptions.....Hmmmm a possible suggestion of fraud. With the cash, why aren't they paying thier bills? Why not buy the appliences instead of those 2X4's?

This happens all the time even if there is no real fraud. Just the idea, like "the appearance of wrong" VS actually wrong.

I am with B2S in that I would STOP work on the house (regarding to purchaseing ANY materials) and work the labor of what you have on hand, rather than tossing your house out as some sort of asset that even though is protected, could put a bad light on your situation. Hold off as long as you can do. Time is your friend. 'Hub

[ozarkmiss]

we're really on the up and up here. nothing to hide. We were golden debtors until our previous home went under water 46k and my hubs lost his job. atty thinks it's a clear case.

I suppose we could have paid off more creditors (and did to some degree) but we've got CC debt that is 15 years old and a big house underwater in the city. Built a humble home in the country. Only credit used towards the new home are the two basic appliances I charged 4 months ago. - and forgot I did so.


But I hear you all loud and clear. I didn't stop paying CCs until 1 or 2 months ago, so I've got some time.............

New seeds to chew on here. Thanks.

[ozarkmiss]

re the cash to build:

20k came from our retirement
30k was an unexpected gift

We occupied the cabin/house 2 months ago, but have been state residents for 2+ years.

[backtoschool]

re the cash to build:

20k came from our retirement
30k was an unexpected gift

We occupied the cabin/house 2 months ago, but have been state residents for 2+ years.

The trustee and the US trustee could possibly dismiss your case for "totality of circumstances". That is a lot of money to put towards an exempt asset while not paying your creditors. Time is your best friend here. The more time you put between your cash exependitures on improving your asset, the less of a bad faith case there will be. It's not just a matter of the appliances. The US trustee is going to want to understand why you had 55k+ to put towards a new house, but nothing to put towards your creditors. You are moving into the house and then filing almost immediately. That will be seen as a big red flag.

[rjmwx81]

re the cash to build:

20k came from our retirement
30k was an unexpected gift

We occupied the cabin/house 2 months ago, but have been state residents for 2+ years.

That 30k gift is going to be viewed as income by the trustee, most likely. Beware the means test.

[ozarkmiss]

That 30k gift is going to be viewed as income by the trustee, most likely. Beware the means test.

?? ~ Well that's a curve ball. No proffessional I've consulted with has cautioned that, and I've really asked them to dig in this area - to insure my piece of mind. The gift came in $5k installments and turned around immediately to pay the labor/materials for the homestead. (installments from April to July perhaps?) The only income I've been asked to report is my payroll stub (only regular income). Hubs is done with UI.

My bank statements could be a landmine the last 8 months. Yet when I verbalize our situation in consults, everyone acts like it's the most natural thing in the world?

Ya'll are spooking me. In a good way. I don't want any curve balls when it comes time. Need to get this all ironed out now. I think I've got time, just feeling antsy to get on with the new chapter.

Must protect little cabin in the woods at all costs.

[rjmwx81]

The income "look back" period for the means test is 6 months...so if the gift payments were received earlier than that then perhaps you'll be alright. Maybe that's why the attorneys have advised you that it's OK. Or maybe they misunderstood your description of the situation. Despite what some of them seem to think, attorneys are not gods, and they do make the occasional mistake.

[backtoschool]

?? ~ Well that's a curve ball. No proffessional I've consulted with has cautioned that, and I've really asked them to dig in this area - to insure my piece of mind. The gift came in $5k installments and turned around immediately to pay the labor/materials for the homestead. (installments from April to July perhaps?) The only income I've been asked to report is my payroll stub (only regular income). Hubs is done with UI.

My bank statements could be a landmine the last 8 months. Yet when I verbalize our situation in consults, everyone acts like it's the most natural thing in the world?

Ya'll are spooking me. In a good way. I don't want any curve balls when it comes time. Need to get this all ironed out now. I think I've got time, just feeling antsy to get on with the new chapter.

Must protect little cabin in the woods at all costs.

Large cash gifts that were spent to improve an exempt asset will be looked at closely by the trustee and the US trustee, especially if you are over the median. I would expect to have a year's worth of bank statements looked at pretty closely.

[ozarkmiss]

attorneys are not gods, and they do make the occasional mistake.

That's why I've already clocked 100 hours here in one weeks time. I asked the atty if I could pay him double so I wouldn't feel guilty armchair quarter backing the dealio. He said no. I know it all comes down to me despite his formidable experience. I learned that lesson the hard way in a ill fated litigated divorce years ago.

virtual hugs for all the forums help...

[ozarkmiss]

Large cash gifts that were spent to improve an exempt asset will be looked at closely by the trustee and the US trustee, especially if you are over the median. I would expect to have a year's worth of bank statements looked at pretty closely.

Our income is over the montly median by about $1200. I expect to be srcutinized. But I intend to follow the letter of the law - They can poke and prod all they want.