Filing in anticipation of a major event.

[wellnowwhat]

Has anyone here ever filed in anticipation of, rather than after, a major financial difficulty in their lives? I'm one of those people who has always been able to pay his bills on time, but my wife and I are having a baby in a couple of months and will be losing her income due to her being out of work after delivery for several months, leaving us with a huge deficit (read: lots of red and not enough black) in our budget. We had also been expecting financial support from my mother-in-law, but she lost her job late last year and has been unable to find work ever since. I've been holding out on filing until now because we kept hoping that she'd be able to find a job and help us, but we are less than two months away from the baby being here and there aren't any signs that things will be improving.

My biggest concern about filing is some credit card charges I mentioned in a previous post. I had opened some new accounts and made some small charges (less than $300 on each account, some even smaller) with the expectation that we'd have some extra money coming in from the in-laws, but then we determined that it isn't likely that's going to happen.

Any similar experiences? Is it going to affect my case at all if I'm filing because of (almost certain) future financial problems rather than "actual" financial problems?

And a note about the above: I will not be filing until after the baby has arrived to make sure that my wife and I don't incur large amounts of medical debt. Having the baby will also push us well under the median income for our state.

[AngelinaCat]

Since you posted this in the CH7 board, I take it that you are considering filing a CH7. You cannot file 'in anticipation of'; it doesn't work that way. You can only file on debts that you ALREADY owe, and cannot pay. The BK code looks at your financial situation on the day that you file. Anything you have prior to that date, can be discharged--subject to restrictions, such as court ordered payments, etc.

After you file--if you incurr new debt such as you would when having a baby after you file, you are responsible for it. You will not be able to file BK again for eight years AFTER you file this time..

I recommend that you wait as long as possible AFTER the baby is born to file. You want to BK against, and discharge as much of that medical debt as possible.

Good luck to you and your growing family!

[AngelinaCat]

As you were told in your other thread, the small cc charges are not that big a deal. So don't worry about that.

You need to plan what you are going to do up to the date the baby comes and after. As I said before, you need to wait as long AFTER the baby is born it file.

[wellnowwhat]

Sorry, let me clarify a bit: I won't actually be filing until after the baby has arrived, so the medical bills will be a debt we owe by the time I actually file. I guess what I'm asking is beginning the process, e.g. talking to an attorney, beginning to fill out the forms, quitting payments to my creditors, etc,.

[keepsmiling]

Stop paying those cc's NOW. Save that money for diapers.
You have almost surely at LEAST 6 months before you are sued.
Took them two years to sue me but we are self employed. And you can always vacate the judgment when you file.

[keepsmiling]

Have we talked about your house yet?
We should.
Equity/owed? Oregon exemptions?

[keepsmiling]

There's a saying, "a baby comes with a loaf of bread under each arm"... let's work with that . Keep the faith.

[wellnowwhat]

We don't own our house. My wife's grandmother does, and we don't owe her anything or anything like that. We do currently pay the "space" rent for it, however, as we live in a modular home park. Really our only assets are two cars, one of which is on a loan on which we are upside down, and the other is a lease. I have some books, computer equipment, a small amount of furniture, clothes, and a couple of musical instruments, but none of it is worth very much.

[keepsmiling]

You might want to tell us about your income and what you pay for rent. You don't want to wind up in an unnecessary 13 because your rent is too low.
Sometimes it makes sense to INCREASE your rent payment in situations like yours.
The rest of the stuff is virtually immaterial.

[wellnowwhat]

We pay $490 a month for rent. Combined our income is about $4800 a month, on average. We are over the median in terms of income, hence waiting for the baby to arrive.

[keepsmiling]

Precisely why we need to discuss. Median is only part of the equation. We need to discuss your other expenses and why you are having trouble meeting them with such a small rent payment. Said with love btw and not to make you nervous. Let's talk about the big picture.

[keepsmiling]

Eligibility for ch7 is based on income and expenses. To be clearer- what's left after you pay necessary expenses (this does not include your cc payment) is DMI. Show too much and you wind up in a 13 regardless of under the median, albeit for a shorter time frame. We are now in the early stages of strategizing.

[wellnowwhat]

Okay. Here's a rundown of my expenses:
Rent: 490
Car Payment 1: 300
Car Payment 2: 325
Electric Bill: 179 (on equal pay plan to account for seasonal fluctuations)
Internet Service: 40
Cable: 40
Cell Phones: 190 (I pay my mother-in-law's phone as she is unemployed)
Gas: 120
Food: 400
Credit Cards: 430
Student Loans: 226
Health Insurance: 500
Other Healthcare Costs: 120
Car Insurance: 194
Animal Costs (food, vet care): 50
Car maintenance: 40
Entertainment: 75

And none of that accounts for child care, diapers, etc, which will come along with the baby.

[keepsmiling]

The cc and student loans won't count as an expense. (cc's get wiped out; student loans go into deferral).

What is the total amount owed on cc's?

[wellnowwhat]

It's about $14k on the credit cards.