Filing 7 and spending/saving

[Richie00]

Hello,
I am new and glad to have found the forum. We are going to file for Chapter 7 after trying for a long time to keep up with finances. We are also going to let them have the house. Since we will be leaving the house I would love to start putting away money so that we can secure a new place. However I am aware that if i am filing bankruptcy I should not be saving money. Is there anyway to do this? the only reason I would have the money would be because I am not going to be paying a mortgage prior to filing but I dont want money seen sitting in my account.

Also we are supposed to be going on vacation for a week soon before we will be filing. This vacation is paid for completely by my parents. We just drive there and they have paid for the place, meals etc. I dont want the trustee to see charges in another state and think I went on vacation before filing, however there isnt much expense with going. I am really paranoid that when I go to the 341 they will question every time I have have bought anything.

Help. I am losing sleep over all this!

[Resigned2BK]

For starters, get used to paying in cash for everything. I reorganized my thinking last summer to just walk over to the attendant and pay cash when I get gasoline instead of swiping the CC and being able to fill up right then. It's not hard to once you can't even get the transaction approved, but it sounds like you still have enough credit line on something that you are still charging.

As for the saving bit, our attorney told us we should spend what we can to pay ahead on things like insurance, rent, go to the dentist/doctor, get new eyeglasses, fill up the pantry and freezer, that sort of thing. But, do not spend more than about $500 on something because then that gets the trustee suspicious or potentially vindictive or something. Also, if you still have a few months (it's amazing how long you can stretch before filing if you want to) then you can sock away some into an IRA or Roth IRA each month, but again, no more than $500 amounts otherwise the trustee can cry foul and demand those funds are released to the creditors. He even said we could spend a little on furniture and kitchen/household stuff as most people don't come close to maxing those exemptions. I've been meaning to sock away $500 a month into my Roth because I extracted about $8K over the past couple years a couple times to save our house from going late. Very very bad idea as we'll lose the house anyway and now that money is lost forever, but that's what happens when you live in fear and don't allow yourself to realize that it isn't the end of the world if you lose a house and file BK.

[helpmeout]

First of all, you need to stop using your credit cards now that you know you will be filing for BK. As for saving money, buy staples instead and start saving the day after you file. This way, you won't have to use your exemptions to keep the savings.

[tobee43]

helpmeout makes an excellent point!! stop immediately using your credit cards.

have you already filed bk??? do you have a date for you 341.

remember you cannot charge within that important "90" day prior to filing date. if so, and you do or have, most likely you will have to pay it back in one way or another. you most likely will be questioned about it, so why do it? so pay CASH for everything is my advise as well. additionally, no one need know about taking a small vaca with your parents, you'll have appreciated the "down time" i assure you.. take it while you can.

in as much as your saving question. we did exactly that prior to our actual filing. once we made the decision to give up the house after 33 years, we stopped paying our mortgage and used all our money to prepare for our move. we sold everything we owned for the move. we made our move into a more debtor state and went underground for 2 years to establish residency so we could use our new states "wildcard" exemption.

the reason i'm telling you this all, is i simply want to explain to you we had a "plan". one which many can't follow, but everyone has their own unique situation and really each step needs to be well thought out, as in a game of chess.

[daylate]

Agree with helpmeout-stop using the cc's and start paying cash. As an additional point I think contributions to an IRA shortly before filing are a no-no unless they are part of a regular pattern that you have been doing. Do a search for that here.

[Richie00]

thanks for the replies. We have stopped using the credit cards. Most of them were in a plan so only small amounts were charged on another one out of desperation when I didnt have enough money one week to get gas. I will start saving the day after I file. I am really nervous about it all. We just dont know how much time we have until we will have to be out of our house and we have small children. I am also nervous about finding a rental. Its all overwhelming.

[sunshinepa]

Welcome to the forum.
Like everyone else said, use cash. As far as the house goes, the mortgage industry is flooded with houses and repossession work. It will take some time for them to get you out of the house, that works in your favor. I have seen some posts here where it was a year and folks were still in their homes. Not saying that will happen with you but due to all the foreclosures, it's a possibility.

When do you plan on filing and are you using a lawyer or going it alone? If using a lawyer, shop around and be sure to put all your questions up front.

Good luck and keep us posted.

[catleg]

I think some of the advice here is way too conservative.

[backtoschool]

Any money left in your bank account on the day of filing is a cash asset that the trustee would take, (if you have not exempted it) so saving for renting if you are not moving out before you file, is not really going to help you much.

If you, as you say above, start saving after you file (I would wait until after the 341, sometimes trustees ask to see bank statements at the 341 and continue the process to look over more recent bank statements), then you should have no problem saving.

Do not use any credit cards at this point.

[debee]

There's nothing wrong with having cash on hand when you file so long as you can exempt it.

Maryland has pretty generous wildcard/cash exemptions.

It's $6000 cash (or any personal property) plus another $5000 in any personal property per spouse.

So you can save $11,000 in cash or if married filing joint $22,000 and exempt it.

But you'll want to go over all your property and the allowed exemptions to make decisions about what/how to exempt the assets you want to retain.

[tobee43]

when you are at the 341, trust me, it is extemely doubtful that your trustee will ask you what's under your mattress. always trust your mattress.

[jeep75]

I've read it recommended on these forums to take a little extra cash back each time when paying for groceries, etc and tuck it away..

[catleg]

Nobody can stop you from spending your money on necessities.
If you don't have cash, for gosh sakes, don't starve, it's ok to buy food on your credit cards right up till the bitter end and there's (within reason) nothing they can do about it.
I hate to see people hairshirting themselves over this stuff.
Sure don't take the gang out to Red Lobster and order the Admiral's Feast.
But groceries, gas; these things while they will not endear you to your creditors or the trustee won't cause your case to be thrown out.
Which reminds me of the famous Citibank objection against a customer's use of the card and their highlighting of a liquor store charge.
The judge said if I had to pay 29.99% I'd be driven to drink too.

[Isobel]

Yes, the whole process is nerve racking. Seems like attorneys don't give enought advice about the plan.... Anyway, I agree to avoid using credit cards. But what about debit card? I figure that's the same as cash. I plan on filing July 1st and stopped the credit cards several months ago, opened a new checking account at a local bank not connected with any creditors and I use my debit card. Debit card = cash, correct?

[keepsmiling]

Yes.
You are allowed to eat and pay bills. Just don't go on a fancy vacation.
I was told here not to buy my son's graduation pics... but I am doing it anyway. Will regret it forever if I don't. Won't be getting the deluxe package tho.