What about my bank account?

[wonkettegirl]

Here I am, desperate enough to file for bk. I will try for a 7, based on the means test, but I may be forced ito a 13. Here is my question:

For the last 2 (going on 3) months, I have not paid my mortgage(s). I will be giving my house back to the bank in the bk. But the $$ that I would have paid into my mortgages is sitting in my account - nearly 4k. What should I do with that money before I file? Should I pay my mortgages up to the point of filing? Should I pay down some of my credit debt? Or should I try to put it into a 401k? None of the above?

[WoodSprite]

Here I am, desperate enough to file for bk. I will try for a 7, based on the means test, but I may be forced ito a 13. Here is my question:

For the last 2 (going on 3) months, I have not paid my mortgage(s). I will be giving my house back to the bank in the bk. But the $$ that I would have paid into my mortgages is sitting in my account - nearly 4k. What should I do with that money before I file? Should I pay my mortgages up to the point of filing? Should I pay down some of my credit debt? Or should I try to put it into a 401k? None of the above?

Hi, Wonkettegirl, and welcome to the forum. This is a great opportunity, and I'm sure lots of folks will respond and tell you what we all wish we had done.

First, DON'T pay down any debt that will be discharged anyway, especially the credit card debt and the mortgage! If it were me, I'd retain a lawyer first, and find out for sure whether you qualify for 7.

If it looks as if you'll be forced into a 13, make sure you've got reliable transportation to get you through the next few years, and once that's taken care of, sink it all into allowable exemptions. Nothing that could remotely be considered an asset, which a trustee may take away, but things like food, eye exams/glasses and other checkups you've been putting off, school supplies and clothing if you have kids. Think maintenance - although not on the house, if you're giving it up. Does your car need tires? There was a great thread on this over the summer.

Don't let the house go and move out of it until either your attorney advises it or you've done enough research to be absolutely sure the timing will work to your benefit, but you'll probably also need first and last month's rent and moving expenses.

Others will be along soon to add words of wisdom, I'm sure. Good luck to you, and keep asking questions!

[StartingOver08]

Have you interviewed BK attorney's yet? One of the first things you might do is check out the sticky's to see which of your debt is either non-dischargable or priority debt and use that money for those purposes. For example, I just filed and kept a very small amount ($100) in my account and the rest was paid to the attorney and to the IRS. You will want to ask your attorney specifically what the best course of action is for your funds since you are giving up the house.

You want to know what your exemptions are and that depends upon where you live.

[wonkettegirl]

Thanks for the replies

Thanks for the replies. I hired a bk lawyer (he's also listed as one of the trustees for our district - is that a good sign?) to write to my bank to offer them a deed in lieu of foreclosure, but they flatly refused that. So he is advising bk. I owe 285k on the house (255k + 30k 2d mortgage); it's been for sale for over 2 years and I just can't afford it since my divorce a year ago. On top of that I owe about 20k in credit (11k marital debt that was supposed to be "paid off" when the house got sold).

I have a crappy car, but am I allowed to go get a new (not new, but new to me) one before filing? I really just need to get out from under my huge mortgage payments!

[imoverit]

How do you find out who the trustees are for your district? For that matter, how do you find out what district you are in?

[Tbornetun]

http://www.usdoj.gov/ust/

The above link is a good place to start.