received Life ins money

[IBA]

After spending several hrs with the lawyer this week we were told that we did not qualifiy for chapter 7 at this time..We did on the 13 with a payment of around 2k each month, which I don't feel we can do...The reason of going Bk is my pay has been reduced over the last couple of years & it's now that I can't afford the home and is expected to reduce more next year...We are going to let it foreclose. This will be the 1st month we are not paying..The 1st is 145k, 2nd of 24k, we had an appraisel done last week & it came in at 112k...So he informed us to ride out the foreclosure save some money & come back in April...yesterday my wife becomes the benificary of a 12k life ins policy on her mother...which she will split with her sister...what should we do now?

[debee]

Not sure I understand your post. If you're hoping to file chapter 7 in future, you just need to let the inheritance money drop off the means test look-back which is 6 months. It won't count as income at that point. If you can't exempt the cash, spend it on necessary expenses like car maintenance, moving expenses, pantry items, dental, etc.

[tobee43]

Not sure I understand your post. If you're hoping to file chapter 7 in future, you just need to let the inheritance money drop off the means test look-back which is 6 months. It won't count as income at that point. If you can't exempt the cash, spend it on necessary expenses like car maintenance, moving expenses, pantry items, dental, etc.

i agree with debee on this....also...basically, you just may have to put a bit more "time" between you and your filing date....

as you said your income will be lowered...you are going to foreclose on your house...so all of that will matter. in the meantime while not paying your mortgage it gives you and yours an opportunity to get some money up for a move if you need to....although, most people would advise you to stay in your house as long as possible.

best of luck!!

[helpmeout]

After spending several hrs with the lawyer this week we were told that we did not qualifiy for chapter 7 at this time..We did on the 13 with a payment of around 2k each month, which I don't feel we can do...The reason of going Bk is my pay has been reduced over the last couple of years & it's now that I can't afford the home and is expected to reduce more next year...We are going to let it foreclose. This will be the 1st month we are not paying..The 1st is 145k, 2nd of 24k, we had an appraisel done last week & it came in at 112k...So he informed us to ride out the foreclosure save some money & come back in April...yesterday my wife becomes the benificary of a 12k life ins policy on her mother...which she will split with her sister...what should we do now?

Might I make a suggestion? Don't stop paying the first mortgage until you are almost ready to file a Chapter 7. This way, you can keep the money you save on not paying the mortgage. If you wait until after foreclosure, you are going to have a lot of cash to exempt, including any security deposits on an apartment and for utilities. And if you don't have enough exemptions for that, then you have to give up the cash. Anything you save after the filing date is yours to keep.

[LadyInTheRed]

If your wife is the only beneficiary of the policy and she gives half to her sister, she is making a payment to her sister that the trustee can take back from her. If she wants her sister to get the money, you should consult an attorney about whether there is a way to get the money to her without it being considered a transfer from you. You may be able to accomplish this with a disclaimer. But, that depends on the terms of the policy, your state laws and how a disclaimer is treated under BK law. You probably need to consult both BK and estate administration attorneys.

[debee]

LITR makes a critical point.

If the full 12K was left to your wife alone and you cannot exempt the full 12k, you have the option to receive it all, exempt sis's half (6K), spend your half down to zero and then give sis her 6k after discharge.