A few questions regarding chapter 13

[Tromploi]

Okay so my scenario is this:

We are filing chapter 13, we live in CA. We are keeping the house, 2 cars and a tractor. We are behind on nothing. We owe about $130K in cc (YIKES!). Our cc payments each month are about $5500. We want to file asap, but need to do our 2007 taxes, and I want at least 3 months of no cc use, and we just started that. So we need a little bit of time. Now my questions are:

A) I can't recall if the paralegal said to stop paying the cards once the atty is retained, or when we file. I would like to retain him prior to stopping the cc payments, because then I can refer the callers to him. When can I stop?
We need to stop paying so we can have the cash to live on. For example, we currently use 2 cards for gas (which is about $1800 month, ALOT!) but we pay off the gas portion each month (or try to, very close).

B) 2 of the cc's we are including in the bakruptcy are from the bank we bank with. If we stop paying the cards, will they just take the money from our accounts for payment? We have a joint checking, savings (nothing in it), a 2 business checkings with this bank. Which is another thought, if they DO take money out of our accounts, and we are filing personal BK, can they touch my business accounts if those are in my name? Both business have no debt, they are fine. Gawd switching all this to another bank will be a nightmare.

Think that's it for now. May have more, any thoughts? Thanks for the help.

[arkienurse]

Okay so my scenario is this:

We are filing chapter 13, we live in CA. We are keeping the house, 2 cars and a tractor. We are behind on nothing. We owe about $130K in cc (YIKES!). Our cc payments each month are about $5500. We want to file asap, but need to do our 2007 taxes, and I want at least 3 months of no cc use, and we just started that. So we need a little bit of time. Now my questions are:

A) I can't recall if the paralegal said to stop paying the cards once the atty is retained, or when we file. I would like to retain him prior to stopping the cc payments, because then I can refer the callers to him. When can I stop?
We need to stop paying so we can have the cash to live on. For example, we currently use 2 cards for gas (which is about $1800 month, ALOT!) but we pay off the gas portion each month (or try to, very close).

B) 2 of the cc's we are including in the bakruptcy are from the bank we bank with. If we stop paying the cards, will they just take the money from our accounts for payment? We have a joint checking, savings (nothing in it), a 2 business checkings with this bank. Which is another thought, if they DO take money out of our accounts, and we are filing personal BK, can they touch my business accounts if those are in my name? Both business have no debt, they are fine. Gawd switching all this to another bank will be a nightmare.

Think that's it for now. May have more, any thoughts? Thanks for the help.

Not up on all the new law stuff, but if you are definitely filing, I would stop the CC payments.
And I know it is a hassle, but I would go tomorrow and open new accounts at another bank, maybe 2 different banks. Cause if you have a loan with your bank, they can definitly mess with your account, even the business ones, as long as they have your names on them.

[Tromploi]

And I know it is a hassle, but I would go tomorrow and open new accounts at another bank, maybe 2 different banks. Cause if you have a loan with your bank, they can definitly mess with your account, even the business ones, as long as they have your names on them.

I was afraid of that. Grr,,,,but it's the bed I made, I must lie in it. I will start opening new accounts ASAP. Thanks for the advice.

[BKParalegal]

First off, make sure you have a competent attorney, especially regarding your business that you own. Not sure what the business is, but if it has any assets( equipment, accounts receivable etc.) and no debt, the BK Trustee could step in and take over the business and sell off the assets. This is rare, but your attorney needs to make sure that it is protected. Also, in regards to your checking accounts, if you are discharging debts at the same bank, most likely they will close the accounts after you file, which makes it difficult for you to open a new one, best to do it now. And yes, you are burning your money by paying the credit cards. The safe thing to do, is starting with the month you stop using them, send them a token payment (ie. $5 or $10) to show that you were still trying to pay them in good faith. It is not common for CC to file an adversary in a BK, unless there was really intent to defraud them, so sending those token payments, may be overkill in protecting yourself, but why risk it.

Good Luck

[AngelinaCatHub]

I would stop using the CC cards now. Open two other accounts but DON'T close the checking accounts. You will have several months to slowly draw down the balances on the original accounts but you do not want to tip off the bank you may be going the bk way. Pull a little to the new accounts then live off only the other accounts untill the balances are drawn down slowly. It would be good to even pay the bk attorney out of the old accounts. Make no preferential payments to any friends, relatives or favored bills. 'Hub

[liz417]

Okay so my scenario is this:

A) I can't recall if the paralegal said to stop paying the cards once the atty is retained, or when we file. I would like to retain him prior to stopping the cc payments, because then I can refer the callers to him. When can I stop?
We need to stop paying so we can have the cash to live on. For example, we currently use 2 cards for gas (which is about $1800 month, ALOT!) but we pay off the gas portion each month (or try to, very close).

Hi there,

Yes, we were told (in mid May) by our attorney to stop paying the cc once we decided to file BK (we will probably file in Aug/Sept.). Start living on cash-only basis, I know this sounds simple but it is harder than you think because you will realize just how much you (me too!) depend on them for "everyday" expenses. Also, remember to stop any *automatic* payments deducted from the credit card!

B) If we stop paying the cards, will they just take the money from our accounts for payment?

Yes, it's called cross-collaterialzation (it would have been written in the paperwork you signed when you opened the account). Get new bank accounts.

Good Luck!

[Tromploi]

First off, make sure you have a competent attorney, especially regarding your business that you own. Not sure what the business is, but if it has any assets( equipment, accounts receivable etc.) and no debt, the BK Trustee could step in and take over the business and sell off the assets. This is rare, but your attorney needs to make sure that it is protected. Also, in regards to your checking accounts, if you are discharging debts at the same bank, most likely they will close the accounts after you file, which makes it difficult for you to open a new one, best to do it now. And yes, you are burning your money by paying the credit cards. The safe thing to do, is starting with the month you stop using them, send them a token payment (ie. $5 or $10) to show that you were still trying to pay them in good faith. It is not common for CC to file an adversary in a BK, unless there was really intent to defraud them, so sending those token payments, may be overkill in protecting yourself, but why risk it.

Good Luck

Thanks for this. I am terrified this will affect my business. It is an LLC if that matters. There is nothing to take, it's a petsitting business. Alot of revenue, but nothing to liquidate. There are no assets either then. It's a weird deal really. I have 17 IC's who work for me, clients pay, and then I pay all the IC's each month, whatever is left is mine. The only thing of value per se IS the business itself and they can't force me to sell that could they?

As far as paying, I was going to make token payments of several hundred dollars, some of our mins are $1400, so the savings is still huge! Is that silly to pay that much? Will it matter in their eyes? No fraud, we have only charged necessities, gas, car repairs, office supplies etc. NOTHING frivolous, we haven't had frivolous in so long.

[Tromploi]

I would stop using the CC cards now. Open two other accounts but DON'T close the checking accounts. You will have several months to slowly draw down the balances on the original accounts but you do not want to tip off the bank you may be going the bk way. Pull a little to the new accounts then live off only the other accounts untill the balances are drawn down slowly. It would be good to even pay the bk attorney out of the old accounts. Make no preferential payments to any friends, relatives or favored bills. 'Hub

Thanks for this also. "Drawing down" will not be hard. There is rarely, if ever. anything left. We start high on the 1st, then pay everything, and I transfer money around the rest of the month to live. Soo,,,should be okay there.

[lrprn]

As far as paying, I was going to make token payments of several hundred dollars, some of our mins are $1400, so the savings is still huge! Is that silly to pay that much?

Frankly it is silly to pay ANYTHING. Unless the payments are paid in full, the cc companies don't count the payment as made. There is no benefit to partial payments at all.

CC companies don't care about you and don't care if you've never been late on a payment in 30 years. It's all about getting as much money as fast as possible with them. They will force you into the poor house in a second and not think twice about it. It's a cold, hard business to them - no human feelings allowed.

Don't waste your hard-earned money making partial payments - use it instead to pay your lawyer.

[BKParalegal]

It sounds like your business is safe. The analogy for your business is it is like a bicycle if you are pedalling it, then it isn't going anywhere. In regards to your credit cards, if you haven't been taking large cash withdrawls in the last 6 months, then you can stop paying cold turkey. As someone else mentioned, any funds sent to them is just burning it.

Good Luck

[Tromploi]

We have taken a withdrawal in the last 6 months, if I remember right just one and it's was probably for $3000 but the following month I sent that card $2500. How will that look?

I honestly didn't know then I would be doing this, I was in denial that the money would just keep coming to pay these HUGE bills.