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The bk pre-planning thread

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  • The bk pre-planning thread

    I've noticed a thread and more than a few question on this topic recently and thought this may be a way for those of us who have been through bk and out the other side to help others just starting the process.

    First off, I'm going to repeat the advice my attorney gives his clients. Prior to filing, get the following issues squared away:

    1. Have reliable transportation
    2. Have a place to live
    3. Have a bank account

    Then, keep an eye on the last time you used a credit card. The law says that a creditor has the presumption of abuse on any charges of over $500 within 60 days of filing or, cash advances over $750 within 70 days of filing.

    Time is your best friend. Again, this is my lawyer's experience. He said while challenges are rare, he has never lost an adverserial proceeding with at least 6 months between cc usage and never had a client subjected to such a proceeding when ther had been a year since any cc use.

    Next, you need to know your states exemption. It may well be possible to take non exempt assets like cash and turn it into exempt assets like, ERISA qualified IRA's. Needed home or auto repairs or things like dental work, glasses/contact lens. Also, legal and filing fees are acceptable as well as the mother of all grocery shopping trips. Cram your kitchen and pantry with all manner on non perishable items. If you have freezer space, all meat and frozen items it'll hold.

    Be aware at this time of year, filers can expect to surrender some chunk of an expected tax refund. You may want to delay your filing until you have spent the refund on neccessities.

    Next, be aware that many states limit your cash on hand at filing. Make sure checks have actually cleared the bank and the amount really is below the threshold. Checks that are written and haven't cleared on the filing date don't count and the trustee may make a demand on some cash.

    Finally, exam what got you to bk and take all steps to fix that problem. A bk is wasted if you can't support yourself post bk. There is nothing more disturing to me than to read a post where someone has filed and been discharged and still lives paycheck to paycheck.

    Anyway, that's a few simple tips on pre planning. I'm sure other members will be adding their thoughts and experiences to this thread.
    Last edited by AngelinaCat; 01-21-2010, 06:21 PM. Reason: Separated the paragraphs for easier reading.

  • #2
    Start saving receipts for all purchases, and document where all the cash is going otherwise. Especially if you eat up a chunk of money before BK like a bank account, tax return, or sold asset.
    I saw two cases of this at my 341, and the debtors had no documents of where the money went. This did NOT sit well.

    Do not transfer any assets within a year of filing. Houses, cars, boats or money. The person you gave it to would have to give it back or up! That would be the #1 way to make an enemy out of a friend or relative, and you would feel crummy.

    I hear the best time to file to avoid giving up your tax return is May to early August.

    Great thread idea. I would have loved to had this info handy, all in one spot before!
    WAM
    ch7 8/07 CLOSED: 11/07 Rebuilding and saving.
    WAMU unsecured $2,000 Capital One unsecured $500
    PAID OFF MONTHLY!!!

    Comment


    • #3
      Hey, great thread.

      On the charges of $500, is that a single charge or is it a total of charges over $500?

      Rick
      11/29/2007 - Filed Ch 7
      01/08/2008 - 341 Hearing
      03/12/2008 - Discharged
      03/21/2008 - Closed

      Comment


      • #4
        Originally posted by RickInMich View Post
        Hey, great thread.

        On the charges of $500, is that a single charge or is it a total of charges over $500?

        Rick
        It's my understanding that it's $500 per creditor.

        Comment


        • #5
          I've maintained $500 in small bills in a safe place for extreme emergencies (not related to credit card bills). This is for something like a war were to break out and no one had access to ATM's or CC's.

          How does this look in BK or does it even need to come up?

          Comment


          • #6
            Originally posted by BKInLA View Post
            I've maintained $500 in small bills in a safe place for extreme emergencies (not related to credit card bills). This is for something like a war were to break out and no one had access to ATM's or CC's.

            How does this look in BK or does it even need to come up?
            When a debtor is placed under oath, he or she is required to answer questions truthfully of his/her petition, having all assets and debt including banking accounts, etc and even "mattress-hidden" funds listed. To have cash stashed away secretly and then filing for bk to get the debt discharged is not appropriate. A debtor can definitely save up money after being discharged or even after his/her 341 meeting.
            Filed Ch 7 08/17/2009
            341 Meeting: Sept. 16th, 2009 (Survived my 341-went just fine)
            Last day of objections: Nov. 16th, 2009
            Discharged 11/23/2009 and closed 11/30/2009

            Comment


            • #7
              This is a great thread. Thanks for creating it Keepmine. It will now become a sticky!
              "To go bravely forward is to invite a miracle."

              "Worry is the darkroom where negatives are formed."

              Comment


              • #8
                I just logged on to ask about going 'all cash' in advance of a BK, and saw this -- good tips, thanks.

                I am coming up on four months of non-payments, and due to worries about bank account freezes (I know, everyone says it's too early), I am not putting my unemployment checks in the bank. I took one to WalMart today, cashed it, and will use that for groceries, miscellaneous household, gas, and other expenses I routinely incur. I am saving every single receipt, as well as keeping a 'petty cash' register to show where every cent has gone.

                The fact that I am changing what I usually do in advance of BK is probably not the best, but I would have an explanation for it if asked. My plan is to deposit only enough in the accounts to cover utilities that are on autopay. I'lll also probably use a money order to pay rent next month.

                The extra hassle is worth it, since at any given time, there will be no more than a few hundred in the banks available for seizure.

                How will this approach sit with a BK trustee? Will they care that I did this or question why? Should I just stop this nonsense and put the checks in the bank? I have been second guessing myself all day and would appreciate fresh perspectives.


                Originally posted by keepmine View Post
                I've noticed a thread and more than a few question on this topic recently and thought this may be a way for those of us who have been through bk and out the other side to help others just starting the process.

                First off, I'm going to repeat the advice my attorney gives his clients. Prior to filing, get the following issues squared away:

                1. Have reliable transportation
                2. Have a place to live
                3. Have a bank account

                Then, keep an eye on the last time you used a credit card. The law says that a creditor has the presumption of abuse on any charges of over $500 within 60 days of filing or, cash advances over $750 within 70 days of filing.

                Time is your best friend. Again, this is my lawyer's experience. He said while challenges are rare, he has never lost an adverserial proceeding with at least 6 months between cc usage and never had a client subjected to such a proceeding when ther had been a year since any cc use.

                Next, you need to know your states exemption. It may well be possible to take non exempt assets like cash and turn it into exempt assets like, ERISA qualified IRA's. Needed home or auto repairs or things like dental work, glasses/contact lens. Also, legal and filing fees are acceptable as well as the mother of all grocery shopping trips. Cram your kitchen and pantry with all manner on non perishable items. If you have freezer space, all meat and frozen items it'll hold.

                Be aware at this time of year, filers can expect to surrender some chunk of an expected tax refund. You may want to delay your filing until you have spent the refund on neccessities.

                Next, be aware that many states limit your cash on hand at filing. Make sure checks have actually cleared the bank and the amount really is below the threshold. Checks that are written and haven't cleared on the filing date don't count and the trustee may make a demand on some cash.

                Finally, exam what got you to bk and take all steps to fix that problem. A bk is wasted if you can't support yourself post bk. There is nothing more disturing to me than to read a post where someone has filed and been discharged and still lives paycheck to paycheck.

                Anyway, that's a few simple tips on pre planning. I'm sure other members will be adding their thoughts and experiences to this thread.
                Last edited by AngelinaCat; 01-23-2010, 10:44 PM. Reason: fix the quote marks for the quoted post

                Comment


                • #9
                  Nothing illlegal aout cashing checks and using the proceeds for HH expenses.
                  If the trustee even bothers to ask-tell the truth. You were concerned about getting sued and a levy placed on your bank account.

                  Comment


                  • #10
                    Originally posted by keepmine View Post
                    Nothing illlegal aout cashing checks and using the proceeds for HH expenses.
                    If the trustee even bothers to ask-tell the truth. You were concerned about getting sued and a levy placed on your bank account.
                    Awesome. Thank you.

                    Comment


                    • #11
                      I did the same. It meant I declared a whole lot of cash in hand on schedules B and C that I had when I filed, but I was taking Federal exemptions anyway and didn't use homestead, so there was plenty of room for exempting it. It's not like I was squirreling away assets to hide them, I was just holding them differently (and then when I needed to give anyone a check, they got a postal money order instead!).

                      Comment


                      • #12
                        Originally posted by keepmine View Post
                        Nothing illlegal aout cashing checks and using the proceeds for HH expenses.
                        If the trustee even bothers to ask-tell the truth. You were concerned about getting sued and a levy placed on your bank account.
                        Thanks for this info as I have been going cash only for a couple of months, cashing unemployment checks, paying with postal money orders (they're only $1.10 each and look cool/official) or CVS money orders (cheaper but don't look as cool). Felt weird and some banks charge me to cash vendor/client checks (I'm able to declare contract work with EDD) -- Wells Fargo $5 for a $90 check!!

                        AlltappedOut

                        Comment


                        • #13
                          Unsure what to do about my Bank Accounts.

                          I have two checking accounts and I owe each bank unsecured credit. I have not missed payments yet, but will not be able to keep up going forward.

                          I assume that I need to cancel all auto pays and open a checking account at a totally different bank asap. I was wondering if it is better to go with a bank or credit union?
                          Are there pro/con's with either?

                          I also have an auto loan i intend to pay w/ one of the banks I owe cc debt to. Do I need to do anything special to "protect" my vehicle?

                          any help is appreciated!

                          Comment


                          • #14
                            Originally posted by iowaguy View Post
                            ...

                            I also have an auto loan i intend to pay w/ one of the banks I owe cc debt to. Do I need to do anything special to "protect" my vehicle?

                            any help is appreciated!
                            Hi Iowaguy!
                            I think you're on the right track -- I have very little money in my checking account at the credit union where I have a car loan and a visa. I stopped paying the visa four months ago, continue to have my car loan auto paid from the credit union savings account. I cash all my checks and deposit just what I need to cover the car payment a few days before it is due.

                            I was concerned about "cross-collateralization" -- the credit union can sometimes take the car to pay the unsecured visa/cc. A recent consult with a bk lawyer here in Northern California assured me that they could not do that unless I had a "signature" or personal loan/line of credit. So, while I am relieved I will get other opinions on this. And you should, too.

                            I am sleeping better and not freaking out whenever I hear a tow truck drive by. lol

                            Alltappedout

                            Comment


                            • #15
                              My first response since finding this forum - great information. Wish I had it a year ago.
                              While I understand the pre planning ideas (have a place to live and have some transportation) ===I won't have either. I will do a consultation this week on a possible chapter 7.
                              Laid off in 2007, and kept myself going with temporary jobs (at half the pay) and withdrawals from my IRA. What I didn't lose in the market I lived on for the past 2 1/2 years. I am getting unemployment, but only $1000/month.

                              I stopped paying the mortgage some time ago, can't find any employment.
                              I think I will end up with the condo in foreclosure, and a bankruptcy. Scary.
                              No medical insurance.

                              Who's going to rent to me with no steady income?
                              I really don't have a choice; I'm running out of money. Any encouragement out there?

                              Comment

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