Cash Withdrawals

[Foofy610]

Hello everyone,

Because of the attorney's fee, we won't be able to file until the third week of November. We've stopped using & paying our credit cards completely. During this time, we'll probably be hitting the ATM for weekly expenses....

When we finally submit our bank statements, will we have to itemize the withdrawals and/or purchases?

How many months prior to filing will the court analyze our bank statements?

Is there a max amount we can spend that will not be considered "abuse"?

If we try to take a day-trip to the shore, and the court sees a "travel" description (or similar) on our bank statement, will that work against us?

As always... thanks!!

[sunshinepa]

I would manage as many as possible of my weekly expenses using the debit card rather than withdrawing cash for all of them. It is much easier and eliminates the need for the documentation. Taking small amounts of cash is no big deal but be sure to keep receipts just in case. You will need to provide six months of bank statements and pay stubs!

There is no "max" amount but beware a Trustee may question any large cash withdrawals. Their job is to make sure you don't have money/assets lying around.
Based on what you posted, you passed the "means test" but may have some DMI if I read correctly. You may want to visit www.justice.gov/ust for more information on expenses.

Have you found your attorney, is that why you say November?

[Foofy610]

Yes, we found an attorney that came highly recommended by my cousin.

The reason we'll have some DMI is because we've been paying $2,000 to $2,500 in monthly credit card payments. Now that we stopped paying the cc bills, we'll be using cash for everything. However, we'll still have a little left over.

Does the trustee scrutinize on the size & description of the debit card purchases? As I mentioned before, will we be penalized if there is a description that the trustee thinks is frivolous?

[sunshinepa]

First, is your attorney putting you in a CH 7 and if so, is he/she confident that you will qualify? That is really the big issue when you have money left over each month. The DMI is crucial to wether you get a CH 7 or a CH 13.

If you are under the median, there ususally isn't much scrutinizing by the trustee (at least in my case, he never looked at bank statements per my attorney). If you are over, they will look more closely at everything. If they see large assets, they will look closely however, you originally stated that is not the case so that isn't an issue.

Let's say you go to the grocery store, spend $400 on the card, don't think that's an issue. Now, you go on that day trip you mentioned earlier, spend $400 on a single purchase, it might get questioned. withdraw $100 cash, probably not an issue. Spend $50 on card, same. If you have a $70 purchase at a gas station, that's a no brainer with the cost today...LOL.

That is just a generalization of what might/might not be looked at. Again, which chapter BK and income do come into play as far as how closely they will look.

[Foofy610]

The means test shows at -$800 DMI. So CH 7 is our best bet. So, I guess the moral of the story is accountability. :-)

[sunshinepa]

Just remember, the means test is only part of the BK process. Actual Schedules I (income) and J (expenses) are very important. And yes, you have to be accountable for your spending, especially if you are over the median income.

[Foofy610]

Your making me nervous!!

[IamOld]

foofy, accountable doesn't mean that you have to "flog" yourself if you go to Wendy's - just make sure that IF anyone asks, you can explain what you spent on.

For example - groceries are groceries - expensive these days; kids need clothes, you need clothes - fine. I have to have my stuff dry cleaned because my office requires "fancy dress" to an extent. It is what it is. (But I live in a VERY expensive area of the country which in a way is "good") I work p/t jobs and yesterday I got Wendy's between F/T and p/t job - should I have in a spending sense? No. I would argue if a Trustee ever asks - well I left for work at 6AM left F/T job around 4pm got to p/t job at 6pm and would get home at 11pm - I think Wendy's is justified.

In short - NORMAL spending everyday ordinary living, stuff you need is perfectly ok.

[Pandora]

as sunshinepea pointed out - means test is only 1 part - what do your schedules say regarding any DMI after all expenses?

[sunshinepa]

Just remember, the means test is only part of the BK process. Actual Schedules I (income) and J (expenses) are very important. And yes, you have to be accountable for your spending, especially if you are over the median income.

Sorry, that was not my intent! As IamOld pointed out, normal expenses are fine and are not a problem. I just wanted you to be aware that passing the means test is only part of the process and there are other factors which come into play. I am sure once you speak with your attorney, they will put your mind at ease. Most are well aware of what the trustees in their areas consider acceptable and will elaborate on anything you should NOT be doing.

Again, my intent was not to make you nervous, this process is nerve wracking enough!

[Foofy610]

Sunshine... I'm really getting worked up over this. Business is business, but this is our lives!!

[drowning123]

OK, guys. Everyone's case is different, but for myself I can say that I spent as usual - groceries, utility bills, movies, etc. On the morning that I was going to file, I withdrew $1600 from an ATM, $400 at a time, for my attorney's fee. Anyway, of course, my bank statement didn't say "attorney's fee." The trustee never asked me anything and if he did, of course, I would have had an answer.

[sunshinepa]

Drowning, I did the same, with the same amount by check...........didn't get a question. But, I was way under the median and per my attorney, my bank statements were never looked at once.....which was amazing!!! It seems in PA, trustees in simple cases push ya thru like cattle....which I was thankful for.....LOL.

The OP is new and is trying to understand what may/maynot happen. While we all know there are no guarantees, I simply wanted them to understand it's not just the means test but several factors that apply to BK.

[drowning123]

Gotcha sunshine. I think on the East Coast they want it over with. LOL!