Filing bankruptcy and receiving a tax refund

[sheilaE]

We haven't met with a lawyer yet, but hope to find one within 2 weeks. We stopped paying all but 1 of our cc in January. Kept paying on the 1 in case we were to need it. I know that sounds bad. but the car keeps breaking down We have about 50,000.00 in cc debt. We have a 1st. for $260,000.00 and a 2nd for $56,000.00. We are current on both of those and want to keep our home. Each month we pay the bills, then charge to get through the month-mainly for gas and food. This has been ongoing for about 2 years. Finally have had enough and decided bankruptcy is the best option.

Here is my question: We are about to file our taxes and will be receiving a return of around $6000.00. Should we use the return to get caught up on the bills? We could probably stay on top of everything for about 4 months. Then we will be right back in this same spot as we are now as we are way over our heads in debt.

Or should we let the money sit untouched in our savings and file bankruptcy, but then won't we get in trouble for having this money sitting in our bank account? When I say sit untouched-it's because I know they will want it to pay the credit cards, but I'm still wondering if it looks bad to have it. I'm so confused as what to do.

Thanks for any advice

[blessed]

What state are you filing in? And how much do you think your house is worth?

[sheilaE]

Filing in California. I'm not sure how much the house is worth. I think it might be worth close to what we owe, maybe a little less.

[blessed]

You might be able to exempt all or some of the money. It depends on a lot of things really. If you have no equity in your house you might be able to use the unused portion of the homestead exemption on cash. I'm not sure about the wildcard for CA, it's either $0 or $1100, I think.

A good attorney can tell you if she/he thinks you can spend the refund on living expenses or if you're at risk of losing it.

We were able to use most of our refund on the attorney fees and exempt the rest, it was only $1900 though.

[blessed]

But something you can do before you meet with the attorneys is to stop using your CCs and stop paying them. When we stopped paying the minimums we were able to free up a decent amount of cash for living expenses.

[sheilaE]

Yes attorney fees-I'm sure that's going to be $$$. That is one thing for sure that we need the refund for. I don't know how to find one. It's not like I can ask all my friends if they know of a good one, so I guess I'll get out the phone book just call one and hope we get lucky. This is so stressful, I really don't want to be interviewing more then 2, plus my husband works long hours, so I might be doing it by myself

[blessed]

Start with this site: http://www.nacba.org/ and see if there is one near you that is a member. Attorneys can be members of the BBB too.

Both consults I scheduled wanted my husband to be there too, so good luck with that.

[SMinGA]

Plan to meet with at least 2-3 attorneys - even if you like the first one you see. Ask questions about your case - such as how you fair in the means test, options for 7 vs. 13, what they require from you, how long it takes to prepare to file, who will be at the court hearing(s), how their fee is to be paid, etc.