Seeking comment on the soundness of my BK pre-planning.

[highonthehog]

Hello all, I've been on this forum off and on for a while now and have purchased the NOLO Chap 7 book. Have not read it through completely, only regarding matters of concern, that is, pre-planning for the inevitable filing.

Fact is, my hope for an improved financial situation has not panned out and I am currently forced to devise an exit strategy for debt I can no longer pay:

Note; no real property, few expensive assets, ALL unsecured cc debt.

1. Since I've been making OVER MIN payments AND using my cc's up to this point (Mar 2011) and my savings are down to only one more months worth of cc payments, it seems that my only option is to stop paying SOME OF THE CARDS and begin saving for anticipated atty's fees. As far as I can determine, items I've recently charged (past 90 days) would NOT be considered luxury from what I have read. However, going back further than that could be iffy. Cards are all within a few hundred of maxed-out.

2. Consult and possibly retain an atty asap, and wait out the next 6 mos before beginning paperwork for filing. My financials could very well change by then so it makes no sense for me to do otherwise right now.

3. Begin selling some assets as needed. Be they exempt or non-exempt, my current situation will require me to periodically sell things in order to keep a roof over our heads. Question; am I correct to assume that creditors and/or trustees will NOT cause me problems because of this selling of assets, when and if I finally file for BK?

4. Keep paying on 1 or 2 cards in order to be able to use for small payments to online accounts such as eBay, to generate income, however small. These cards have low limits and low payments.

Thanks for reading and apologies for such a long post, but please feel free to shoot holes in this at will. Kind regards

[octoblonde]

I would say to get a free consult with an attorney. They will probably tell you to stop using the cards now and to stop paying them. It doesn't sound like you have much of a choice but to stop paying if you are almost out of money. Save that money for the attorney & filing fees. To my knowledge, it is ok to sell things before you file as long as you get fair market value for them. In other words, you can't "sell" your car or expensive jewelry, artwork, etc. to a family member or friend for less than what it's really worth. You could try selling on craigslist or your local Yahoo Bartercycle group instead of ebay to avoid seller's fees. If you continue to use the cards for anything other than necessary living expenses, they are going to say it's fraud because you knew you couldn't pay them and were going to file bankruptcy. Hope this helps!

[Chowder]

Hello all, I've been on this forum off and on for a while now and have purchased the NOLO Chap 7 book. Have not read it through completely, only regarding matters of concern, that is, pre-planning for the inevitable filing.

Fact is, my hope for an improved financial situation has not panned out and I am currently forced to devise an exit strategy for debt I can no longer pay:

Note; no real property, few expensive assets, ALL unsecured cc debt.

1. Since I've been making OVER MIN payments AND using my cc's up to this point (Mar 2011) and my savings are down to only one more months worth of cc payments, it seems that my only option is to stop paying SOME OF THE CARDS and begin saving for anticipated atty's fees. As far as I can determine, items I've recently charged (past 90 days) would NOT be considered luxury from what I have read. However, going back further than that could be iffy. Cards are all within a few hundred of maxed-out.

2. Consult and possibly retain an atty asap, and wait out the next 6 mos before beginning paperwork for filing. My financials could very well change by then so it makes no sense for me to do otherwise right now.

3. Begin selling some assets as needed. Be they exempt or non-exempt, my current situation will require me to periodically sell things in order to keep a roof over our heads. Question; am I correct to assume that creditors and/or trustees will NOT cause me problems because of this selling of assets, when and if I finally file for BK?

4. Keep paying on 1 or 2 cards in order to be able to use for small payments to online accounts such as eBay, to generate income, however small. These cards have low limits and low payments.

Thanks for reading and apologies for such a long post, but please feel free to shoot holes in this at will. Kind regards

Most wait far too long to start planning. I planned for a year and should have started a year earlier.
Bottom line get with a good Attorney ASAP. If possible, get a referral from a friend or family member.

[tobee43]

i very much agree with the PP...we, retained an atty, however, even waited two years before filing.

it was extremely important to have an "exit" plan...or just a future plan in the works. also, i must mention, the only reason we waited thet 2 years is we moved to a move credit friendly state and wanted the "wildcard" as well as the fact we needed to be honest and truthful on our petition and a few questions related to..."have you within the past 2 years blah blah..."...and we needed to be able to answer NO truthfully.

we used that time to make monthly payments to the atty we had retained, and even when we were ready, i gave the firm the "go" ahead, i.e. did NOT want to file until our tax return came and went etc.

we interviewed 5-6 atty's before finding the "right" one. so take your time and go with whom you feel most comfortable in this most uncomfortable time.

best of luck to you!

[daylate]

As to point 1, if you quit using them now and stop paying on them now and don't file for 6 months, you will have at least 9 months between you and any possible "luxury" purchases. because you have been making over minimum payments I think you will be well protected.

#3 I think you are correct in your assesment as long as the proceeds are used for necessary things and you do as octoblonde said and don't sell to insiders and get FMV for the items sold.

#4 I think works unless you wind up paying more than 600 to any one creditor in the 90 days preceding your filing.

#2-I don't understand-in 6 months will your income increase? decrease? expenses increase? decrease? pass means test? can't really comment without some other input.

best advice is to begin the process of selecting an attorney and run all this by the candidates. Don't be surprised if you get a different answer or two. it amazes me how different (and in many cases wrong) the answers to my questions were.

[highonthehog]

Thanks for your comment Octoblonde, very much appreciated. Yes, free consultation is the first goal and any items I sell will very much be FMV becasue I will need cash to stretch as far as possible. And as for the last 3 months I have used the cards for a few things that may not be considered living expenses. But then who is to say that something like a GPS is not a vital tool just like a mobile phone? For job search, side work, whatever?

[highonthehog]

Thanks Chowder, I also appreciate your comments. Yes, waited too long but I plead ignorance and lack of research into the aspects of BK. Even though I have been out of work for almost a year, I really didn't think it would come to this so soon. When my last project ended, (construction) we had $17K in savings and figured we could survive at least a year without work and was sure something would come my way. Also was counting on some side work that never materialized... I believe this is called wishful thinking, no?

[highonthehog]

i very much agree with the PP...we, retained an atty, however, even waited two years before filing.

it was extremely important to have an "exit" plan...or just a future plan in the works. also, i must mention, the only reason we waited thet 2 years is we moved to a move credit friendly state and wanted the "wildcard" as well as the fact we needed to be honest and truthful on our petition and a few questions related to..."have you within the past 2 years blah blah..."...and we needed to be able to answer NO truthfully.

we used that time to make monthly payments to the atty we had retained, and even when we were ready, i gave the firm the "go" ahead, i.e. did NOT want to file until our tax return came and went etc.

we interviewed 5-6 atty's before finding the "right" one. so take your time and go with whom you feel most comfortable in this most uncomfortable time.

best of luck to you!

Thanks for the comment but I'm astounded that some wait over a year or two before filing--- is it really necsassary to hold off that long? What if your income goes up and you no longer pass the means test--- chap 13 I guess?

[highonthehog]

As to point 1, if you quit using them now and stop paying on them now and don't file for 6 months, you will have at least 9 months between you and any possible "luxury" purchases. because you have been making over minimum payments I think you will be well protected.

#3 I think you are correct in your assesment as long as the proceeds are used for necessary things and you do as octoblonde said and don't sell to insiders and get FMV for the items sold.

#4 I think works unless you wind up paying more than 600 to any one creditor in the 90 days preceding your filing.

#2-I don't understand-in 6 months will your income increase? decrease? expenses increase? decrease? pass means test? can't really comment without some other input.

best advice is to begin the process of selecting an attorney and run all this by the candidates. Don't be surprised if you get a different answer or two. it amazes me how different (and in many cases wrong) the answers to my questions were.

Thank you too Daylate, very much appreciated. On the one point about paying more than $600 to any one creditor--- is that cumulative? What I mean is, is that majic sum in one lump payment or an accumulated $600 over the previous 90 days? I've read of this but it does not specify.

On the other point that my income may change/increase within the next 6 mos., to explain--- I work in construction and there are in my area 2 to 3 fairly large projects ramping-up right now and it is very possible that I will get a call-out to one of these jobs, thereby increasing my gross income 3-fold. So I am anxious to get this Chap 7 done with ASAP because once I get called back to work that throws a wrench into my situation--- BIGTIME! In fact, I'm wondering what the heck happens if I stop paying the cc's and retain an atty, and then DO go back to work full time? I will of course fail the means test but then will I have to go Chap 13? And what happens if I only work a year and then no longer can continue paying a negotiated Chap 13?

No doubt, I really need a consultation w/lawyer asap... thank you all again, very much!

[daylate]

Its an accumulated $600 to any one creditor. Sounds like filing sooner rather than later is in your best interest if yoru income could increase 3x. Get hopping on htose attorney consults. Good luck.

[Chowder]

Thanks for the comment but I'm astounded that some wait over a year or two before filing--- is it really necsassary to hold off that long? What if your income goes up and you no longer pass the means test...

You work in Construction. I own my own business. This makes us ideal candidates for planning a proper Chapter 7 because we have the ability to control our income during those critical 'look back' periods. This also allows time to receive maximum benefit from any non-exempt asset liquidation.

[tobee43]

Thanks for the comment but I'm astounded that some wait over a year or two before filing--- is it really necsassary to hold off that long? What if your income goes up and you no longer pass the means test--- chap 13 I guess?

well, i think each has a different reason for filing.

when we both lost our jobs, what delayed our filing for those two years, which really we had to go "underground" like criminals!!...and just to be able to answer the petition "truthfully".

we had to wait since it was a more complex situation than many. and, i wasn't as worried about a 13, as i was other persons that could have been directly effected unless we waited. although, for us, a 13 with no jobs, losing our home after 33 years, surrendering one of our cars, selling everything we had, probably would have been unlikly, it was still in our personal circumstance better to have waited.

we also, still had some atty's insisting we file 13...HOW?? we had no income...except exempt income from ss and a pension...(police, fireman), in the state we filed were exempt.