Cashing in stocks??

[nordie]

I'm trying to figure out what to do with some employee stock that my husband has prior to filing. I'm worried that if we cash it in and spend it on necessities it will still be considered part of our income. We are currently under the means amount for Maryland but cashing in some of the stock may put us over if it's considered income. I emailed our attorney; our correspondence is below. I'm worried that what she's telling me may not be accurate. Any thoughts? Thank you!!

My email to her:

We're trying to decide if we should cash in some of my husband's employee stock. The only reason we would do that would be to get caught up on our mortgage payment and maybe take care of some necessary things like car repairs. My question for you is, if we cash in some of that stock, would it be considered income? If that's the case then we should rethink that because I don't want to go over the amount designated for the means test.

How about if my parents gave us money to pay our overdue mortgage payment? Would that count as income? Or maybe they should just right the check directly to the mortgage company?

My attorney's response:

It does not matter if it went towards the mortgage.

Yes, cashing the stock is better because the stock is an asset and if you use to to get current on the mortgage it is fine.

[TheBajan]

Welcome to the forum!

The stocks are an asset whether you cash them in or not. If your exemption allowance doesn't cover them, the trustee can liquidate them to give to the creditors. If they are exempt, it's better to keep them where they are. I'm in a chapter 13 and the rules are a little different. I'm not sure whether it would be considered income in relationship to the means test. I'm sure someone with more knowledge will be along to clear that up.

I think it is considered income if your parents GIVE you money. However, if they LOAN you money by paying your mortgage arrears for you, they simply become a creditor that you would add to the BK filing. There are so many people here with more knowledge than I have and I'm sure they will come along and either correct, or verify what I'm telling you. Stick around... and my best wishes to you.

The Bajan

[despritfreya]

To the extent you receive cash in excess of the original cost of the purchase for the stock, such would be "income". If you are worried about the "income" file the bk in the same month as you cash in the stock. So, for example, if you cash in the stock on 4/1, use it to catch up the mortgage on 4/15 and file bk on 4/20, the "income" will not have any impact on your 6 month window since the 6 month window would have ended on 3/31. Got the picture???

Des.