Budget advice for Ch7

[bobertthecat]

Hello, I am semi-new here and have learned much from reading all of the threads.
I plan on filing Ch 7. fairly soon. I am trying to time it so I file 4 to 6 months after my layoff from second job(last paycheck from it was Aug 2010). (My income from one full-time job passes the means test with "flying colors". ) I also want to file before Chase sues me for my 10K credit card (plus fees) balance (last payment=June 2010).
My problem is that after 1st & 2nd mortgages, utilities, car pmt.,gas for my car, one other credit card minimun & basic groceries I have less than $50 cash left for meds, clothes, etc. This is even after I have stopped paying the Chase card. My short term financial goal is to save $2200 for lawyer fees and filing. How would you recommend trimming my budget to accomplish this? Here are some otions I have. I am willing to do one or all of them....I am just not sure how to prioritize based on the details given below.
1) Cut out all cable bills but Internet service. (ie: no TV/home phone at all-I have pay as you go cell plan). This would ultimately save me $70 month-BUT they would charge me a $150 fee for changing my contract(10 months left on that). In my cash strapped state that extra $150 fee seems daunting.
2) Stop paying my other credit card. That would give me another $250/month to put towards lawyer fees. However, in September, I did a $250 cash advance. I haven't missed a payment since then and am current with them. But doesn't it have to be 90 days of payment after any credit card usage before you can stop paying? (Isn't that something the trustee any will look at closely?)
3)Stop paying on my second mortgage. I am already 30 days behind. I am very seriously thinking of letting my condo go. That would net me another $337/month. I am so far underwater that there is only about 5K/equity of 50K owed on the second.

Also some notes:
I will keep my car because my credit union doesn't have a collateral clause(w/the card in #2 above) and I have less than a year of payments to go on it. I will re-affirm.

I am putting household stuff on Ebay and Craigslist. I estimate that I may get $200 for this. Most of my other possessions(furniture, etc) were freebies or yard sale finds of little value. So I don't have alot of equity in personal possessions.
I would appreciate any budget advice you can give me. Thank you.

[daylate]

It seems to me that you have to decide if you are going to file and what to do about your condo-if you decide to let it go, then I don't see the harm if you stop paying both your mortgages and all the others you mentioned which should get you your attorney fee in a couple of months-as far as the cc suit, as I understand it, even if they sue and get a judgment it will be eliminated through the Chap7. my advice is to talk to three or four attorneys in your area to get a feel for your options

[mrskal]

Maybe you can let your whole home phone/tv plan go, and put that all in the BK including the $150 charge. I did that with a cell phone plan. I think you can stop payment on that other credit card, by the time you file it will be past 90 daysof making your last charge. I do not think that you need to pay them for 90 days to file, I believe it is not have charged anything for 90 days. (double check that one though). I actually carged $65 worth of gas before I filed, thinking I was using my debit card, my lawyer said dont even worry about it. Do start going for some free lawyer consults after you start a good list of these kind of questions.
$2200 seems a little high to me for the lawyer, but it may just be that way in your area, shop around.

[brokejoker]

Cut where you are comfortable cutting back and get yourself on a cash only budget that covers your expenses before you file! After you file there will be no cash advances to turn to. If I were in your shoes right now I would seriously look at giving up the condo. Not just for the lawyer's fees but for the future. What happens if you file and 3 months from now you need your appendix out? Do you have health insurance? Can you pay for those medical bills? What happens if your tires get shredded because you hit a board on the highway? Can you pay for that?

If you're just setting yourself up for missing payments in the future when something unexpected pops up then you really need to re-evaluate and make it so you're living within your means and have some extra padding in your budget for an emergency fund.

[tobee43]

Hello, I am semi-new here and have learned much from reading all of the threads.
I plan on filing Ch 7. fairly soon. I am trying to time it so I file 4 to 6 months after my layoff from second job(last paycheck from it was Aug 2010). (My income from one full-time job passes the means test with "flying colors". ) I also want to file before Chase sues me for my 10K credit card (plus fees) balance (last payment=June 2010).
My problem is that after 1st & 2nd mortgages, utilities, car pmt.,gas for my car, one other credit card minimun & basic groceries I have less than $50 cash left for meds, clothes, etc. This is even after I have stopped paying the Chase card. My short term financial goal is to save $2200 for lawyer fees and filing. How would you recommend trimming my budget to accomplish this? Here are some otions I have. I am willing to do one or all of them....I am just not sure how to prioritize based on the details given below.
1) Cut out all cable bills but Internet service. (ie: no TV/home phone at all-I have pay as you go cell plan). This would ultimately save me $70 month-BUT they would charge me a $150 fee for changing my contract(10 months left on that). In my cash strapped state that extra $150 fee seems daunting.
2) Stop paying my other credit card. That would give me another $250/month to put towards lawyer fees. However, in September, I did a $250 cash advance. I haven't missed a payment since then and am current with them. But doesn't it have to be 90 days of payment after any credit card usage before you can stop paying? (Isn't that something the trustee any will look at closely?)
3)Stop paying on my second mortgage. I am already 30 days behind. I am very seriously thinking of letting my condo go. That would net me another $337/month. I am so far underwater that there is only about 5K/equity of 50K owed on the second.

Also some notes:
I will keep my car because my credit union doesn't have a collateral clause(w/the card in #2 above) and I have less than a year of payments to go on it. I will re-affirm.

I am putting household stuff on Ebay and Craigslist. I estimate that I may get $200 for this. Most of my other possessions(furniture, etc) were freebies or yard sale finds of little value. So I don't have alot of equity in personal possessions.
I would appreciate any budget advice you can give me. Thank you.

while i understand you are concerned about how to pay your atty...i would stop the cc's and the 2nd mortgage and have the atty work out payments for you.

also, have you shopped around...i know in many states the prices vary for atty fees...but in the two states we lived the atty's we saw cost the same for a 7...which was $1500. and, we didn't have the money so we made monthly payments of $100 until we were all paid up. also, we did have "time" or did want to put as much time between us and the filing date....and, even when we were finally paid in full with the atty, we still held off for a while.

so...first i would suggest to shop around and see if you can get an atty you can feel comfortable with but may cost less
and secondly...if just use the monies from the cc's to make money payments until you are pd in full with the atty.

best of luck to you!!

[Dee]

I would agree with previous posters that you should probably stop paying the other cc and, if you really are going to let the condo go, both mortgages. You have already stopped paying on one cc, so the longer you wait the higher your risk of getting sued. You also do not want the payments to the cc you are still paying on to be considered "preferential payments". Mortgage companies are not clamoring to take property back right now, so you will probably have a while before they start making too much noise over the missed mortgage payments. That should give you time to not only pay for an attorney, but to also save money for deposits for a new place to live.

[Pandora]

if you already know you're going to file CH. 7, then stop paying your creditors and use that money for your lawyer. Dont use your credit cards at all. As the others have stated, you need to really look at the affordability of your home - if you are going to let it go and do a "stay and pay", then discuss with your lawyer what is in your best interest as far as stopping payment.

[momofthree]

Just another vote to stop paying all the credit cards and 2nd mortgage. If you pay any of your creditors $600+ in the 90 days up til filing, the trustee will turn your case into an asset case, seize the money back from the creditor and distribute it to all your creditors, so paying that 1 credit card doesn't benefit anyone.

[coak1875]

Bobertthecat, I am no expert but i can truly say that living on a budget have been a big help to me I started in January of this year and I have had more money than before, do i have bills sure but i streamed lined everything completely. What you did not say is what your 1st and 2nd mortgage payments were if you can add that to the post i will give you a basic break down of suggestion. I am filing BK7 on November 23rd, 2010 and it made me felt good that when I reviewed my statement every amount was in tact nothing questionable, or nothing to extravant. Also what is your take home pay no sure if i missed that, from that information, i will give you suggestions that have worked for me. I am filing BK7 by the way because my payments is over $2467 monthly I have not paid my second in over 2 years, and just stopped paying my first in October, 2010. So i would be glad to share, i await your post.

[bobertthecat]

Thank you all for your replies. I think I knew that I had to do what you all have suggested. I just needed someone to affirm my thoughts. So thank you!
Coak1875, you are right. I have an idea of a budget but since being laid off from job #2 I never sat down and wrote a new one.
But is a quick monthly budget
Take Home Pay=$2590

Mort#1= $600
Mort#2= $337
HOA fees= $230
Car pmt= $350
gas= $190
Electric= $65 (on budget plan)
cell phone=$35 (pay as you go plan)
Cable(TV/Internet)=$130
Netflix=$10
CC#2=$250
Audible=$18.00
groceries for 1=$400 to 500 (includes cat litter, toiletries, etc)
med copays=$60
car maintenance= $50
Clothes=$50(guess-timate since I have been holding off for awhile)
haircut=$50 (ditto on the guess-timate)
Insurance=$ 100.00
Total $2525
does this sound about right?
Thank you again for sharing your knowledge.

[coak1875]

I have reviewed your numbers and offer the following suggestion: Firstly, your mortgage payment seems very low, total $1167
would you be able to find something less in your area that would save you about $300. Secondly, if you are filing BK stop paying that credit card payment that's $250 that you can be putting towards something else, like the Attorney fees as you have said, next the Cable TV/internet, get rid of the cable, keep the internet, i watch the TV shows on the internet maybe a day behind but who cares thats another $65 in savings, Netflix I am assuming thats movies, I would say for now get rid of it.That insurance is that auto insurance? If its auto insurance then you can either try to negotiate for lower payment don't hurt to ask., The biggest problem with having a budget and sticking to it is you also need to include an allowance for yourself. Without that you are bond to dip into other areas. Finally, if you intend to give up your condo, you must be able to find something that will in fact give you no less than $300 in savings to use elsewhere, otherwise even though you maybe upside down if getting rid of it does not allow you to save any more than you do now then its pointless. Did you try to see if you can qualify for HAMP or one of the Government programs? So to recap $250 Credit payment to Lawyer as you said, $65 +$10 total $75 allowance for yourself. If you are absolutely going to give up your place and are sure that you can find a place later saving you more than $300 per month then stop paying that mortgage altogether. If you do then you would be in a better position to a) pay your lawyer and file b) save some money as you wont have to move from your condo immediately. All and all you seem to be on the track and your numbers are what they are. I hope this helped.

[tcreegan]

Hi bobertthcat,

Just wanted to throw in something no one else touched on....don't worry about the cash advance, $250 is too low for a creditor to go after, you made a few payments, and it will be more than 90 days old. Nothing to worry about there.

Don't let the Chase suit change your BK plans. Go over to the collections forum for some tips on how to deal with this. It is pretty easy to stall these suits for several months or more.

Good luck with this, keep posting questions, lots of good folks around here to help!

Tom in Colo