What makes a case an "asset case?"

[ssmdem]

I keep seeing that term used here - and I get the gist of it - but are they basically saying you don't qualify for a Chap 7 and must do a Chap 13?

[ssmdem]

Ok - did a little more searching a found a thread I think explains it. Essentially, our current assets that we don't have a loan on are three cars and a motorcycle -- worth less than a $1000, $4500, $3000, and $6000.

Our attorney has said trading in the $1000 car towards a new car would be fine, that the trustee wouldn't say a word, but that we needed to let the rest stay. So, what's the chances of this becoming an asset case? I just want to get this done and over with fast once we start. We're in Florida.

[StartingOver08]

No, you can be a Ch 7 asset case. If you have any assets over your exemption amounts. This could be due to excess funds in your bank accounts (over the exemption) or even due to preferential payments or insider payments or even excess equity in your house or your vehicle.

This is one of the main reasons to pre-plan your BK, so you don't end up leaving cash or equity for the trustee. If you do have excess cash or equity, you can make arrangements to pay it to the trustee and still get your Ch 7 discharge.

Check your values of your vehicles. If you owe, for example, $4000 and the value is $3500 then there is no equity for you to worry about. OTOH if you owe $4000 and the value is $5000 then you have $1000 equity. There is a limit to the equity you can have in your vehicles/house etc.

look here for your exemption amounts: www.legalconsumer.com
Florida has terrible exemptions except for homestead and if you are upside down, that won't help you.

[ssmdem]

Cash in bank accounts brings to mind another question. Once we stop paying the credit cards and most likely the mortgage (upside down $65K), we will have a significant amount of cash in the bank. Obviously some of this can be spent on living expenses that we had previously been charging, we have some medical bills that our attorney says we can pay off, we're still going to be left with a a good bit, depending on how long we wait until we file -- would increasing my husband's 401K deductions be considered fraud? We did a loan against his 401K - yes I know, one of MANY mistakes we've made - but with the loan payment amount, we had to discontinue his deduction because we just couldn't afford it. If we reinstitute that deduction, actually increase it to 15% where it should have been anyway, are we doing anything wrong?

[StartingOver08]

You can increase your 401k deductions. You can also put in a lump sum in your 401k and pay attorney fees from excess cash before filing. You can pay taxes (Federal/State) you might have due, if any, prior to filing.

Look up BKDefenders posts, he has some excellent ideas about what to do with excess cash before filing.

[blockhead]

You can increase your 401k deductions. You can also put in a lump sum in your 401k and pay attorney fees from excess cash before filing. You can pay taxes (Federal/State) you might have due, if any, prior to filing.

Look up BKDefenders posts, he has some excellent ideas about what to do with excess cash before filing.

Do they allow you to deduct 401K contributions? If so to what amount and does that vary by where you file. Or do you mean repaying a loan from a 401K.
Seems that would look like you can afford to contribute to your retirement but not pay back the creditors.

[ssmdem]

Do they allow you to deduct 401K contributions? If so to what amount and does that vary by where you file. Or do you mean repaying a loan from a 401K.
Seems that would look like you can afford to contribute to your retirement but not pay back the creditors.

Good point - although you could look at it as I can NOW afford to contribute to my retirement because I don't have these credit card bills. ??? I'm just trying to figure out how to keep from having too much excess cash on hand once I stop paying the credit card bills. For us, it's a wash if we just stop paying the credit card bills - we were putting living expenses on the credit cards and paying the minumum payments each month. If I stop paying that and just paying for my living expenses, I have no excess cash and if I just file for my credit cards, it won't be an issue. BUT, if we decide to let the home foreclose too (we're upside down $65K) then that's when I'm going to have to worry about the excess cash - that gives us an extra $2800 every month.

[ssmdem]

What happens if I do become an asset case? We have the vehicles and then whatever cash might be still in our account. What do they do?

[keepmine]

What happens if I do become an asset case? We have the vehicles and then whatever cash might be still in our account. What do they do?

You surrender thecash and cechicles to the trustee and he distributes it to your creditors.
Won't interfer with the timing of your discharge-it'll just delay closing until the assets are distributed. That's just an administrative function and no big deal to you.

[ssmdem]

You surrender thecash and cechicles to the trustee and he distributes it to your creditors.
Won't interfer with the timing of your discharge-it'll just delay closing until the assets are distributed. That's just an administrative function and no big deal to you.

They are honestly not going to want any of the vehicles except possibly the motorcycle. Two of them couldn't be sold if we tried - they're one step short of the junk yard. So, what happens if even they can't sell them?

[keepmine]

They are honestly not going to want any of the vehicles except possibly the motorcycle. Two of them couldn't be sold if we tried - they're one step short of the junk yard. So, what happens if even they can't sell them?

That's not your problem.

[ssmdem]

Does it delay the discharge I guess is more what I was looking at - just wanting to get this behind me and done with!!

So, essentially, I can sell what I want - it becomes cash which is still a non-exempt asset anyway. Don't make any preferential payments, i.e. worry about paying dad back after discharge. As long as we sell it for FMV, we're still good, right? If cash is used towards necessary living expenses, groceries, medical, etc - we've done nothing wrong. ??

Can we purchase two newer (not brand new) cars (we aren't splurging, trust me!)?? The reason being better interest rates now than post bankruptcy - we would reaffirm those loans. Our attorney saw nothing wrong with that but absolutely not to trade in the cars we have now towards the new ones. Just try sell what we've got now for FMV, hopefully - or let the trustee deal with them and he can have them all??