I have a unique situation and need help!!!

[AFISurfer]

I am almost 24 years old and have almost $45,000 in unsecured cc debt including a $10,500 Car Loan(it was repo'd). I haven't paid on any of these in over 3 years. Last year I was hired as an independent contractor and I worked off and on making $22,000. The year before I only made about $10,000. This year they were able to use me a lot more and will end up making just around $40,000. I have no home, automobile, or anything other than a suitcase with some clothes in it, a laptop, and a digital camera. I get a check deposited when I work of $2,000 bi weekly equaling out to $4,000/month. The only thing I've paid this year was $1,700 to the IRS for last years taxes and I paid it a month ago (late I know). I received a notice from the clerk of courts in FL that I am being sued for $6,500 from a creditor in January. Worried that they will definitely get judgment against me I removed $6,000 I've saved up from my recent paychecks leaving just under $1,000 in the acct.). I thought about bankruptcy only after withdrawing the funds, but with research I've learned that withdrawing that sum of money would raise a red flag to the Trustee. I stop working in mid-december (I'm an Independent Contractor so I'll be out of work for a while as of that time) so I will receive about another $6,000 ($2,000 bi-weekly) or so deposited in the bank from the company that's paying me and I had planned on withdrawing the paychecks as soon as they hit. That would leave me with a bank acct showing that I've withdrawn $12,000 in cash over the course of a few months. I currently am using some of the $6,000 I've already withdrawn for hotels, food, etc because I live on the road while working. When I finish in December I plan on using the other money to get situated with a place and living expenses.

My question is this...

(A) If I were to file for Bankruptcy prior to the time I'm supposed to be sued, will I be able to keep the money I have withdrawn, or would the trustee take that to repay debts? (All the money I have is wages I've made over the past 6 months and I will use them to live off of bc I don't know when the next time I will work is.)

(B) Should I settle out of court and pay the creditor a discounted $4,500, but then possibly be sued by another creditor a month later and be in the same boat?

(C) Should I wait to file because of the activity on my bank acct? and if so, how long? Come mid-January tho I will have a judgment against me for the $6,500 and they will take my bank account. (That's why I withdrew the money I had in it)

(D) What would you do in my situation?

There is a chance I could get more work as an independent contractor the first or second month of the year, but there's just no telling. I hope I'm not coming off dumb. Thank you for any help or advice you may have for me! I'm at a loss!!

[keepinitreal]

I guess first you need to know for sure what your state of residence is for bankruptcy purposes. Each state can have different dollar amounts for exemptions. Have you been a permanent resident of Florida for the past 2 years?

There's nothing wrong with having cash on hand instead of in a bank account. It's still up for grabs by the Trustee though if you do file for bankruptcy and can't exempt the cash.

I don't think you need to wait to file just because you pulled cash out of your bank account. You just have to show how much you spent and how much you have left.

If you haven't contacted an attorney for a free bankruptcy consultation, that should be your next step.

Good luck!

[AngelinaCatHub]

Pulling your money out was wise. Getting a Judgment is not. Use that money about a third for your bk. That will stop your legal problems. The rest use for essential items that are exempted. Food, utilities, rents and business items as clothes. Keep a bit back under at least $500 and you will be fine. Your best bet right now is to interview with at LEAST three lawyers, and pick the best with your gut feeling.

You will be fine. You have people here who care about you. Hang in and keep posting you progress. 'Hub

[tcreegan]

Hi AFISurfer, and welcome!

$4000 a month is right at Florida median income: $3282 month So you qualify for a Ch 7, no problems there

Keeping $$ out of accts to prevent a judgement collector from grabbing it has to be common as dirt in Bk circles.
In Florida you are allowed to have $500 wages a week for 6 months = 12K in cash. Spend the rest on legit living/business expenses. Document where the money goes, and you should not have any problems.

With 55K of debt spread over several creditors and no stable job projection....

...settling is going to be difficult. Like you said, settle w/ one and another raises its ugly head. I'd take this option off the table.

...filing BK, get rid of 55K of debt. w/ judgements on the horizon, credit score will tank anyhow, removes BK option for 8 yrs

...stay judgement-proof option. Don't have anything they can collect for the judgements, hassle but leaves BK option open

If you file the BK, I would work on a back-up plan to deal w. variable income w/o credit options.

There are a lot of good folks around here, welcome aboard!

Tom in Colo

[AFISurfer]

Thank you all for your responses!! It really is nice to have a place to talk openly about my financial troubles. One question I have is...Why is it bad for them to get a judgment against me if I do not leave anything in the bank for them to seize? Just curious. Thanks!!

[keepinitreal]

Thank you all for your responses!! It really is nice to have a place to talk openly about my financial troubles. One question I have is...Why is it bad for them to get a judgment against me if I do not leave anything in the bank for them to seize? Just curious. Thanks!!

Because 2 years from now, things may have improved for you. You may own a car or house that creditors could put a lien on. They won't go away. Of course if you do file bankruptcy, you can get the lien(s) removed.

[AFISurfer]

I saw that "rent" is listed as exempt. How many months in advance can I pay rent with this money. Also, I rent a room from someone and I do not have a lease with them. It's just a month to month deal and don't ever get a receipt. Will this be a problem?

Also, I've been looking online to find where it says I can keep 6 months of wages equaling $12,000 as you've stated and can't seem to find it. Where can I verify this?

My problem with speaking to an attorney is while working, I am in a different city/state everyday, and a BK attorney wants me to come in person for a consultation. I won't be able to do that until Christmas time and my Judgment hearing is January 12th

[Freddy03]

You don't want a judgment unless you are completely judgment proof. In FL they can garnish up to 25% of your wages and levy any bank account with out warning. If you don't want to file BK I'm sure the creditor suing you will work out a "court step" settlement. If you could I would offer nothing more than 40%. All 3 of my lawsuits the creditors wanted to settle the day of trial.

Also you have time if you do end up with the judgment you will have 45 days to get the creditor and the court your financial information - if you want to file.

[AFISurfer]

Also, is paying the IRS my taxes considered a preferential payment because I did not pay anyone else?

[Freddy03]

Also, is paying the IRS my taxes considered a preferential payment because I did not pay anyone else?

No - you can and have to pay the IRS.

[AFISurfer]

If I live in FL, but work as an Independent Contractor out of California, could they still garnish my wages?

Also, They are suing me for $6500 for a $3000 credit acct. They said they would only settle for $4500 and no less.

How is someone "Judgment Proof?

[Freddy03]

If I live in FL, but work as an Independent Contractor out of California, could they still garnish my wages?

Also, They are suing me for $6500 for a $3000 credit acct. They said they would only settle for $4500 and no less.

How is someone "Judgment Proof?

I don't know about the wages.

I was sued for $6500 - a week prior to trial they called everyday to settle for 50% - day of trial it went down to 40%. I declined. I lost and now have a judgment and my reason for filing BK.

Judgement Proof:

Creditors can't obtain money from people who are judgment proof because they are:
•Insolvent, having no assets to be collected
•Don't have enough property to satisfy the creditor
•Protected by laws that exclude wages and property from being used to satify a claim

[keepmine]

Nobody is judgment proof. You can always get sued.
The correct term is, execution proof. That means all your income/assets is exempt from seizure like, SS or money in ERISA qualified retirement accounts.
You need to do some preplanning with that $12K or risk losing it. Spending it down with ordinary living expenses, paying a bk lawyer, getting reliable transportation and getting your housing needs taken care of prior to filing are all legimate uses of the funds.
See a few bk lawyers as soon as possible.

[AFISurfer]

Also, my bank acct shows $4,400 spread out over the 6 months of ATM withdraws at Casinos. Yes, I had/have a gambling problem. Will this be an issue or red flag?

[AFISurfer]

How much am I allowed to spend on a vehicle? Thanks!