Help! Sooner or later?....bankruptcy timing

[whitekr]

I have been reading this forum like crazy, as we are trying to decide if we will file for bankruptcy. We will probably meet with a few attorneys in the next week or two to see what our options are.

I keep read some old posts today that dealt with timing. Some people said "the sooner the better", as they would have saved a lot of money by filing sooner. Others say be patient-don't rush, wait to file until you have to.

What are the pros and cons of waiting or doing it right away?

Our situation: about 50K of debt. So far no late payments on anything, but our "cushion" has just run out and we will not be able to keep up. I think we will qualify for CH 7 becasue our last 6 months salary was under the minimum.

[anonymuse]

Depends on quite a few items.

Sometimes people wait to ensure their CMI (Computed Monthly Income) is below the median. This might occur if someone gets a yearly bonus and wants to get that out of the window, or someone changed jobs with a significant paycut and has to wait until their CMI reflects their current salary.

It also depends on:

when was the last time you incurred a debt--spent money on your credit card, took a cash advance, or did a balance transfer?

when the last time you payed any creditors recently showing a preferential payment?

[CATCHMEIFYOUCAN]

I just filed as of July, depending on your situation. The sooner the better, i think it best to file before you get so behind, but also depends on what was the last thing you did on your cc's (like did you buy luxury items, did you have cash advances). oh, im not a lawyer, just another consumer.

make sure when you file you have "everything,"

last six months of your paystubs

last two years of your taxes (you can get free transcripts of taxes through the IRS by phone)

the attorney will tell you everything you need

good luck !

catchmeifyoucan

[anonymuse]

As soon as you've decided to file, you can stop paying your unsecured creditors immediately--don't want to keep dumping money there if they'll be discharged.

[SinkingFast]

Timing when to file is really based on personal circumstances.

If you have a fair amount of money in the bank you cannot cover with Exemptions, you'd want to wait until you've spent those funds on necessities. Keep receipts, be prepared to document. The car needed new tires. You had a root canal not covered by insurance. Stock up the pantry and freezer. Get new winter coats for the kids.

Did you take a cash advance or use a convenience check within the last 70 days?? Did you charge in the last 90 days on any one of your CC's?? I know the Law says "luxury goods and services" but a Creditor could raise an Objection if they wanted. If either of these applies, you'd want to wait to file.

If you have excess equity in your home you cannot cover with Exemptions, you want to keep your home and you qualify for a Ch 7, you'd wanna wait to file. Maybe refi or take on a 2nd. Fix the roof. Get a new fridge.

Or you know you're gonna be in a Ch 13 for 5 years and your old car is on it's last leg,........ Trade your old beater for a newer, more reliable car.

Look at your overall personal circumstance. See what you need to do, how long you'll have to wait prior to filing.

[whitekr]

Those are some good points to consider. I have a few credit cards, in two categories:

1. Ones with large balances on which I no longer charge at all or only some household normal expenses. I am paying just the minums (but can no longer afford to)

2. Ones that I use for my business. I generlaly pay the balance off every month. So these do have some large recent charges, but are paid off as part of routine business (cost of goods sold, mostly).

So would I need to stop charging to my business compekltely, or would those be charges be OK since they get paid off?

[anonymuse]

The safest thing to do is not to have any charges or payments in the last 3 months.

White, are you going to get a lawyer? Even if you don't (however, I highly recommend that you do), go get at least 3 free consultations. Write down your concerns and make sure they are addressed.

[whitekr]

Yes! Definitly. I just have not gotten to that point yet. I think my case will be too complicated to try on my own. In fact, I am just about to start a "How to find a lawyer" thread

[SinkingFast]

Those are some good points to consider. I have a few credit cards, in two categories:

1. Ones with large balances on which I no longer charge at all or only some household normal expenses. I am paying just the minums (but can no longer afford to)

2. Ones that I use for my business. I generlaly pay the balance off every month. So these do have some large recent charges, but are paid off as part of routine business (cost of goods sold, mostly).

So would I need to stop charging to my business compekltely, or would those be charges be OK since they get paid off?

If the total you've paid to those those CC's per LOC is in excess of $600 each, you wanna wait to file. In the Schedules, you have to list any Creditors you've paid in excess of $600 in the aggregate to within 90 days of filing. That's $600 per Line of Credit. Not $600 total of all payments made.

The Trustee can go back to those Creditors and get those payment monies back from them to disburse amongst all the Creditors who file a Proof of Claim. Those payments you've made could be considered Preferential Payments when filing BK.

[InLimbo]

Sinkingfast, we made 2 payments in August to our 1st and 2nd mortgages (over 1200.00 to the 1st one and 800.00 to the second one) to try to get them catch up because we were going on 3 months behind. So would my mortgage payments in excess of 600.00 be a problem? We also borrowed the money from my parents to do this (wish I would have had them to pay the payments instead of putting the money in my bank, but just wasn't thinking at the time) and will that be a problem for us? We can always say it was a gift if needed. Our 1st mortgage payment is over 600.00 monthly anyways.
We will be filing next week.

[SinkingFast]

Payments on Secured Debts in excess of $600 isn't an issue, InL.

As far as where the money came from,.............. Just get a gift letter and you have your CYA there. The longer you wait to file, the less of an issue it will be also.