Can a 5/3 early access account be included in Ch7?

[mslaw]

We are taking all our paperwork to our atty on Monday to file. We have an Early Access (basically fancy payday advance loan) from 5/3. Can we include this in the BK? It's at over 1K. Also, we just emptied our account there and started a new checking account (per advice from here) and they won't let us actually close the checking account because of the aforementioned associated early access. So, if we have any transactions go through, we have no funds in there. Will our negative balance be covered in the BK? I made sure all checks had cleared so it would just be autopayments maybe that overdrew.

Thanks for any info!

[bcohen]

By 5/3, I assume you mean Fifth Third Bank? Yes, you can discharge payday loans, overdraft line of credit loans, and even overdrawn bank accounts in Chapter 7. If at all possible, I would wait to file for bankruptcy until 91 days have elapsed from the last date on which you took out money under this (or any) loan in order to avoid a possible AP. For around $1000, an AP is extremely unlikely, but unless you are being sued or garnished right now, I'd wait to file until the 90-day "lookback period" has passed.

[justbroke]

As stated, the 5/3 Early Access is only a form of "advance" on your pay (direct deposit). It is nothing more than a fancy payday loan and is subject to discharge.

[mslaw]

Thanks! So some of these were recent. Will that be a problem? We really need to file this week.

[btbeme]

Thanks! So some of these were recent. Will that be a problem? We really need to file this week.

Why the rush to file?

Transactions and cash advanced within 90 days of filing may trigger a Presumption of Abuse and may not get discharged in the BK. You don't want either of those to happen if you can avoid it.

[mslaw]

Why the rush to file?

Transactions and cash advanced within 90 days of filing may trigger a Presumption of Abuse and may not get discharged in the BK. You don't want either of those to happen if you can avoid it.

We've stopped paying on our house. We were told by the mortgage company that they would turn the case over to their attorney once it's 3 months past due. (It has happened before). And we have a bonus that should be coming by the end of June from dh's work and we would like to file before then. (We do not know how much it will be but we don't want that to be a big problem either).

[btbeme]

We've stopped paying on our house. We were told by the mortgage company that they would turn the case over to their attorney once it's 3 months past due. (It has happened before). And we have a bonus that should be coming by the end of June from dh's work and we would like to file before then. (We do not know how much it will be but we don't want that to be a big problem either).

Your attorney can advice you better than I can at this distance, but there are a few things I know to be true...

First thing: Mortgage companies will always refer to The Attorneys. That is part of the process. The first step is to do just that, which is the start of the foreclosure process. That foreclosure process - even if it is only an hour before the foreclosure sale - grinds to a screeching halt the moment you file Ch 7. Until then, it has a methodic process which must be followed (and varies from state to state). Do not let the threat of a foreclosure proceeding scare you into an early filing that will almost certainly bite you in the nether regions.

Second thing: Unless you are dancing close to the edge of being over median income, many bonuses (especially in this economic climate) would not be a significant factor in disqualifying a Ch 7. Of course income is an important factor, but a good attorney can measure the Bonus Factor against the Presumption of Abuse Factor and advise accordingly. Believe me, in most cases, a happenstance bonus is a much smaller factor to explain than a cash advance last month that you are trying to discharge. And, at your 341 under oath you will be expected to answer whether you have expected income that you have not yet received. A bonus that is due in xx days is exactly what the Trustee is asking about, so please don't think that filing just before a bonus will keep you out of the frying pan. That has burned a lot of people - their stories are here in these forums.

Now, you should temper these opinions with a strong dose of the actual numbers and stir it with your attorney's advice...a small cash advance two months ago is likely to make very small waves versus a large bonus that throws you over median income. But I would strongly advise that you lay the cards on the table for your attorney and let him/her make a recommendation based on their knowledge of the situation and the local Trustees. Don't rush into a decision with a singular mindset. Sometimes, and more often than you would think, timing is everything.

Last advice - file when ready, and file when you need to file. Not before, not after. If you are not sure when that time is, trust your attorney.