Legitimate Expenses Before Filing

[cc78464]

My wife and I came to the conclusion that we would need to file in April. Since then we have been getting everything in order as far as expenses go into the future. We've changed our habits and brought expenses down. We have been trying to file but our lawyer keeps coming up with reasons that we should wait which have all been excellent. Together we have 100,000k+ in CC debt, a second mortgage for 120,000 that could be stripped based on our recent appraisal with house prices dropping. We plan on keeping the house although it has no equity.

Anyway, my question has to do with my lawyer's latest suggestion as the last step before filing. We just received our tax refund (yes in August) for $7,000 and he advised us to spend it before filing. Since April, we have spent the minimum on things outside of our mortgage. We have 4 children with school on the horizon.

We are looking to find out what others have done before filing or suggestions you may have. The kids all need clothes, shoes and supplies which would probably be close to $500 each. We need repairs on the house (electric, plumbing). We could use a new Fridge etc.

It seems that people are always worried about fraud but my lawyer said save the receipts and as long as they are legitimate expenses don't worry.

What have people used the money in their bank account on just before filing? The reason for spending this down is we need to use our exemptions on business inventory to keep that afloat.

[soleprop]

What have people used the money in their bank account on just before filing?

i paid overdue rent, repaired my car, invested in new tires and preventive maint. for my car including brakes, tie rods, wheel bearings, bought food to freeze (hit the meats!), and bought clothes to replace worn/ruined work wardrobe.

[cc78464]

Exactly the type of response I am looking for.

Could you put a dollar amount on each?

[Phillymanhere]

hey,
There have been a ton of threads on this in the past. You can scroll down and find them.

The bottom line is folks were advised to do (and did) exactly what your lawyer said. If you spend on necessities (with receipts), then the courts won't give you grief. But if you have that recently disbursed tax money hanging around, they will want to take it back.

There is an interesting irony about this entire situation and your question and skepticism towards your lawyer's advice. This is NOT criticism in any way. It's just my thinking aloud. The irony is that all of those expenses that your lawyer advised you to spend on are perhaps the most important and legitimate expenses in our lives.

But we folks facing BK have gotten so out of whack financially that we forget that if we don't fix the car now, we'll have to fix it later at a higher price! And this repair is totally predictable! In other words, these expenses (the kind your lawyer is giving you the green-light on) are as important and legitimate as weekly food money. It just doesn't appear that way to financially struggling people, who are living day-to-day. The fact is we all need to plan to set aside money so we spend regularly on these long-term expenses. But we don't and so when the chance comes to actually spend on these items, we can actually feel guilty

Anyway, good luck.

[cc78464]

One of the other reasons for my post was to come up with ideas of what to spend the money on. i know this sounds strange but after fixing a few things, buying clothes and groceries, I'm still going to have $2,000 to spend plus my monthly paycheck is going to hit on the 10th and I'll probably end up filing after that. probably back up to 7,000 again.

I was hoping to find some ideas of things I am not thinking of. For one my attorney said get a money order for the next months rent early. Any other suggestions?

[Mi Bankruptcy]

How new is your furnace? Do you have central air? Sorry if I was presumptious about you owning a home.

[bal_ny]

Obviously this depends on where you live, but how about home heating oil? If it were me, I'd prepay for my whole winter's oil now rather than pay higher prices in November.

[woeisme]

Sounds like you have an excellent lawyer who is really looking out for you with the pre-planning work they have suggested.

What about medical that has been deffered? Have the kids (and the adults) all had eye exams and been to the dentist lately? I know glasses are expensive, even with our insurance. And if you are putting off that tooth that needs a crown or root canal or whatever, that could easily be a few thousand and you don't want it flaring up while you are in your CH 13 plan (just making an assumption off of income level.)

[Phillymanhere]

oh man this is a great problem!

How old are your cars? What about car maintenance and repairs? I'm always late on tune-ups, timing belts, tires, oil changes ... Maintenance, even going to really reputable places that don't inflate the work or their prices, always costs way more than I imagined. It's like take my worst estimate and double it!

And ... if you pay car insurance on a monthly basis, you could pay it all in one fell swoop. Same with any other insurance you have. Beds, air conditioners, radon testing of home, electrical work, roofing work, water pump for any water problems, orthodontic work for the kids.

this is a great problem, but trust us: you will easily be able to solve it!

[keepmine]

One other option is, place some in an IRA or some other exempt asset.
I agree with the others. This is obviously not your lawyers first rodeo. He's representing you to the best of his ability.

[Frogge]

I can think of 500 things to spend legitimately.. the dr /dental bills are a big one, refill all available meds. And all car maintenance (my husband could spend $5000 in repairs and maintenance on his, no problem (LOL). Stock up on non-perishable food, linens, towels, personal items that can be stored, first aid kit, etc....

Good ones!

[liz417]

One other option is, place some in an IRA or some other exempt asset.
I agree with the others. This is obviously not your lawyers first rodeo. He's representing you to the best of his ability.

Great idea keepmine!!!

[soleprop]

yup i forgot some more stuff i did too: i bought health insurance (i haven't had it for 3 years), renter's insurance (i haven't had it ever), and 6 months' car insurance.

i spent $220 on tires, $400ish on car parts/labor (did most of it with a friend to save dough), probably $300 on clothes (my dress pants were wornnnn out), and i've been spending at least $300/month on food (single, eating fresh and stocking the freezer).

'splurges' that fit into my exemptions: a mirror, a weight bench, a cuisinart blender/processor, a toaster oven, a foreman grill, and a new crockpot.

oh yeah and i bought my parrot a new cage that makes more sense for our living space. that was $200.

i wanted to buy new glasses and contacts, but i haven't gotten to it yet, and had to file to stop a judgement.

hope those kinds of details help!

[Cali]

I didn't do anything before I filed but pay my normal bills.

[soleprop]

normally i wouldn't have either, but i needed to use my stimulus and tax refund, a lot like the OP. ;)