buying stuff before filing BK - or buying car question...

[Pandora]

Curious BK--I just want to give you kudos for taking the criticism so well and being able to admit your faults without acting defensive.

As far as the cash, CA provides the exemption for it, so the trustee can't touch it.

PLUS 1+ on Mom's post re: you admitting your faults. Takes one hell of a man / woman to do that openly and not cave inward on the defense. Kudo's to you CuriousBK, you're ahead of the game because you know what needs to be changed behavior wise.

My apologies if it seemed like I was harsh, it wasnt my intent and after re-reading my post this morning, it kinda came across that way, but most certainly wasnt intended that way. Sometimes the fingers type before realizing....(grovel grovel grovel)

Cookie?

[DIY]

my wife and I are considering filing BK.... I do not think we will qualify for a 7, more than likely a 13.

Why do you think that you won't qualify for a Chapter 7? A high income alone does not mean you will fail the means test. What type of debts do you have? Do you have any business debt? What is your disposable income?

[momofthree]

Curious BK--I just want to give you kudos for taking the criticism so well and being able to admit your faults without acting defensive.

As far as the cash, CA provides the exemption for it, so the trustee can't touch it.

[catleg]

Hey...give the guy a break. What are you all, a bunch of collection attorneys? :-)

Just for laughs, I found a ch13 case in NJ where the debtor had a waterfront home, three cars, two boats, and his job was delivering newspapers (I kid you not). Initially he surrendered the two boats and one car, and about a year later surrendered the home. One of the cars was a late model Mercedes.
I should check up and see if there's been any new filings. (No it's not the real housewives from NJ, but pretty close).

[curiousbk]

you are all very correct. I want to have my cake and eat it to.. maybe I have to stop thinking that way... am I a bad person b/c I wanted to have one last buying "fix" before I went cold turkey... maybe i'm just like those drug addicts who go on a bender before they go into rehab... i can admit it!

to clarify.. i'm not bashing people who bought houses above their means... i was merely pointing out that the BK and home loan mod system seem to provide a bigger benefit for people who are deeper int he doo doo. People who bought a hosue totally w/in their means get zero relief. the fingernail lady who makes $30k a year and bought a $500k house on 'stated income' interest only loans get a loan mod so she can keep her mcmansion.... that's the way it is but it's not fair. it rewards people are who are careless. i bought a house that I thought was within m means, then over the past 5 years of home ownership, I have slowly gone negative every month, poorlyh budgeted, then took a long term pay drop...and failed to adjust my standard of living... i'll admit it. i took a pretty good pay cut.. over the past two years it was close to 20%... that was partially what got me the loan mod...

yes, I agree, there are legit and unavoidable reasons why people go into BK... I guess I was focusing more on the people LIKE ME, who did stupid stuff to get into BK. i will readily admit.. i did take a pay cut, but by no means lost my job.. instead of making 160k, i'm down to sub 140k.... still a LOT of money by the average US standards... and yeah, i'm up to my eyes in debt.

i don't really want bling wheels.. that was a sarcastic comment. but i will admit, if I could go buy a new car and then file BK I'd frikin do it because I'm a car junkie. i don't like clothes, i don't buy jewelry, i don't need to eat at fancy restaurants, but if I could have a porsche 911 i'd do just about anything to get it... but that's my one vice... cars. i love sporty cars and driving fast. i used to have a very nice sports car... i got rid of it when things got bad financially. i now drive a very nice but very boring mid level luxury sedan.. thing Lexus ES300 kindof a car... i'd rather have an Audi RS4 or BMW M5...but I guess taht is kind of out of the picture at the moment... ;)

i do appreciate all the comments, info, and even the criticism. it keeps me realistic. i can handle it... maybe I need it..

i really do NOT want to get back into this mess afer I get out of it. maybe being in a ch 13 is better as it will force me to be on a plan for 5 years... vs a ch 7 would be a quick fix and i'd likely go right down the same road again... i will admit this... i'm a smart guy, highly educaed, very high responsibility position job... but when it comes to money, i am stupid. my parents taught me a lot of things, how to be wise with my money was one area they blew it. i don't want to make that same mistake with my kids...

here is a seriosui question - not aimed at trying to stockpile money for blingy wheels.. but to prepare in a well thoght out fashion for a ch 13. if I did stop paying the 2nd mortgage and credit cards.. and the reason I stopped paying was solely to put cash in my pocket.. and I SAVED that money.. so id' have a safety net while in my 13... for unforeseeable emergencies.. say i had 10-15k sitting in the bank.. and i flat out told hte trustee i was saving that for if/when the $hit hit the fan and I had a $5000 car erepair, or a sick kid and huge med expenses, etc.... are they going to let me keep it or would they sieze it and take it?

[Pandora]

Where to start with it all... hmmm. First, I agree with HHM & newbie's posts - the "cake & eat it too" syndrome; second- for one thing, you're broke if you're considering filing BK - and $21K exemption or not - to stop paying creditors only to turn around and use that money to get new "toys" would appear to be bad faith in my book. You will still have to exempt it all and you also must list what year / when purchased. Spending $1K on "bling bling" rims? That money could be used towards something a little more beneficial to your family and overall household, but then again, thats my opinion on it. As for the Trustee - he/she cares a great deal about your assets and money - dont underestimate that for a moment and if you believe the trustee wouldnt take any of them, think again. While filing a CH. 13 generally can save your items, you must remember that the Ch. 7 test applies and if you go over your exemption amounts, you will either have to turn it over or pay it back in your plan.

What bothers me (among many things you've written) the most however, is that here you state you'd qualify for a Ch. 7 if you "had only bought a house way over your head" thereby implying you bought within your means, but bash your neighbor for purchasing "above their means" - yet you had to have your house modified due to..... what exactly???????? Living beyond your means...

FYI - there are many reasons why someone files BK - including job loss while living within one's means; your comment of "..stupid stuff people who get into BK do" is pretty far off the mark. However, that being said, upon reading your postings it appears that you will end up right back where you are now because you are still looking at BK as an easy out as well as what benefit you could get before your creditors.

Unfortunately trustee's dont look at it that way. Chapter 13 is about learning to budget and live within your means. Its not easy and can be very trying at times which is why most people dont make it through to completion. You need to learn what is a "want" and what is a "need" for it to work and be successful.

Good luck to you

[IamOld]

There are multiple questions going on in this thread so let's separate the issues.

1. The OP's question is can he go out and BUY a newer car right before filing...in that scenario, I think he would get serious push back from the trustee in allowing the payment.
2. In general, because the means test allows you to take full secured expense, generally, having car payments over the allowed amount is not a deal breaker, it is more a matter of degree. And the issue is very much a district by district, judge by judge issue. So my warning is that have combined car payments over the allowed is a "potential" issue or not a zero risk issue. However, if you are somewhat over, you will be okay, if you are substantially over, the trustee will probably object arguing that your unsecured creditors should be prejudiced (receive less) so the debtor can maintain a higher than average car payment.

Also, it is a false dichotomy to present the issue as having a car and not having car. You CAN get a car while in chapter 13 BK. The issue is the over all expense of the vehicle.

In general, from a pure financial perspective, what are you doing even having a car payment...or, maybe to ease into it, why would you even have a car payment that is above the median...that is simply too much car to meet the "need" of having transportation.

HHM thank you - this makes PERFECT sense - I think I'm comfortable now due to your answer because it's "only" $260 more than the IRS allowed AND we've had car #1 for 3.75 years and car # 2 for 2.5 yrs. SO they're not exactly new things...

[HHM]

to HHM - sorry for intruding on this thread, but reading this has a question for me:

spouse and I have two cars, and yes the two payments are MORE than the IRS max - which where I live the atty didn't even blink over...why is that a problem?? in a Ch 13? Again, in my area no car=no transport=no job=no money. Incidentally, my mort is only like $90 over IRS "allowed"

There are multiple questions going on in this thread so let's separate the issues.

1. The OP's question is can he go out and BUY a newer car right before filing...in that scenario, I think he would get serious push back from the trustee in allowing the payment if it exceeded the allowed amount.
2. In general, because the means test allows you to take full secured expense, generally, having car payments over the allowed amount is not a deal breaker, it is more a matter of degree. And the issue is very much a district by district, judge by judge issue. So my warning is that haveing combined car payments over the allowed is a "potential" issue or not a zero risk issue. However, if you are somewhat over, you probably will be okay, if you are substantially over, the trustee will probably object arguing that your unsecured creditors should be prejudiced (receive less) so the debtor can maintain a higher than average car payment.

Also, it is a false dichotomy to present the issue as having a car and not having car. You CAN get a car while in chapter 13 BK. The issue is the over all expense of the vehicle.

In general, from a pure financial perspective, what are you doing even having a car payment...or, maybe to ease into it, why would you even have a car payment that is above the median...that is simply too much car to meet the "need" of having transportation.

[Alt2Att]

It seems like more of a moral question to me. If you can afford all of this new stuff, then why are you filing bankruptcy? I believe that bankruptcy should be a last resort.

[IamOld]

to HHM - sorry for intruding on this thread, but reading this has a question for me:

spouse and I have two cars, and yes the two payments are MORE than the IRS max - which where I live the atty didn't even blink over...why is that a problem?? in a Ch 13? Again, in my area no car=no transport=no job=no money. Incidentally, my mort is only like $90 over IRS "allowed"

[newbie2]

curiousbk, you received many helpful responses here: http://www.bkforum.com/showthread.ph...into-a-7/page3

Frankly, you appear to want it all to go your way, and bk isn't like that. Also note that filing for BK is optional - you don't have to do it. If you go on a pre-bk spending spree now to make yourself feel better you should expect some pushback from the trustee.

[HHM]

If you are looking for sympathy, get a dog. You won't find it here. You earn $140,000 a year and lived beyond your means for many many years. So, the idea of "treating" yourself is simply more of the same attitude that got you into the mess and now you want to make things worse, I certainly don't buy it and most on this forum are not going to be sympathetic. If you really think that it will be 5 years of shoe string and then "back to normal", think again. The changes you will need to make in a chapter 13 are "lifelong" changes, not just a temporary hiccup in your financial path. If you don't learn those lessons, you will be back here 5-8 years after your chapter 13 (assuming you can even get through it, I have my doubts given your attitude), and will back in the BK boat.

As for your questions, they don't grill you per se, but you need to be in a position to justify what you did.

Let me put it this way, if you were called to testify as to why you spent money on X, are you comfortable that a judge would see it your way and say, no problem?

[curiousbk]

do the trustees grill you and try to beat you down emotionally or something????

i would imagine that many people in BK are there for various reasons... bad decisions. living beyond their means... and winding up creating a hosue of cards that has come tumbling down on top of them..

i can see the good faithi thing... stopping payment on CC and taking a 10k trip to Vegas does look pretty crappy. i have no intention of doing that.

i would be receptive to trying to maximize certain benefits to myself - like fixing a bad washer or dishwashing machine.... getting tires that need to be replaced, stuff like that.

is there scrutiny or negativity if you stop paying before the BK and pocket tha tmoney into the bank?

if I don't pay bills for 3 months or 6 months, and save that money, will they let me keep it? they must know that peopel do that.. stop paying and thenpocket money before BK??/ but they let you keep it.?

then do they scrutinize what I do with it after I file BK and am in the plan? if they exempted 20k I had in cash... do they care what I do with it while I'm in BK? or is every move I make evaluated?

why is there an ad on this BK site for leasing BMWs... just noticed that as I"m putting up this reply... i can't imagine a BK site is the right place for BMW to want to advertise leasing a luxury car! maybe they think we can't help ourselves...

i have to admit..there are a few things I'd liek to treat myself to beore I file BK.. nothing nuts but there are things I'd like to get if I know I'm going to file.

let me put it this way - is there a general time limit / cutoff where the trustee isn't going to care about what I bought? meaning this - is I were to run out and buy a new sofa, new dishwasher, new washer/dryer, and those 18" chrome wheels... maybe an ipad, a computer... i could go on... and then within 30 days I were to file BK... yeah, that looks really messed up.

what if I know I am going to probably file.. but i know I can float my finances for another 6 months.. so I buy some of those items now... the sofa, the appliances even the bling bling spinner wheels.... and then I keep paying stuff for another 90-120 days.. and THEN I file BK.. is there some presumption where even thought they might think that I "knew" I was going to file and bought some stuff near the end... but b/c of the time lapse between buying and the BK filing - they would just let it go?

basically, yeah, there is some stuff I want to get, but if I can spread out the "getting" and the filing - will I be okay?

if I'm going cold turkey for 5 years... I'll admit.. I'd like to take care of my household to hold myself over.. i don't intend to get back into this problem again... BUT, if I'm going to sabotage my credit, and be on a shoestring type budget for 5 years.. i'd like to maximize how it benefits ME before I do it.. even if I am pushing the envelope.. as long as I"m not breaking rules or doing anything illegal or doing something that will ruin teh BK process.

i had read that if people charged things on their Creidt card, but it was 60 or 90 days before the BK, there was a presumption tha tit was NOT fraudulent. but you KNOW people will go out and buy a big screen 90 days before they know they are going to file BK... but does this go on and just slide by?

is it a time thing a $$ amount thing,, do they microanalzye my spending habits and payment habits... and if so, over what time frame / time span do they look at it.

thanks.

[catleg]

The one thing I sort of regret...I have two loans at 10% and 12%, I wish I had let the trustee make the payments, as I think he would have forced down the interest rate, but the temptation is to minimize the ch13 plan payment, so we kept the cars outside with us continuing to make payments.

[minan]

Curiousbk: there are still a lot of things about bk and chapter 13 that are confusing for us. You're not alone, however this forum has been a great source of info and of comfort especially on those days when you feel down and wonder how you ended up in this mess...we still have many of those as we are still waiting for confirmation. Every time we think we've taken a positive step forward, something else takes us 2 steps back. This last week was an example.

You will be under the microscope or should say your finances will be under scrutiny. You will have probably more downs at the start. You will feel bad about yourself and how you ended up in this situation. I'm saying all this because this is not an easy road to take. It's a roller coaster ride emotionally and mentally. The scrutiny from the Trustee is difficult. You will need to make changes to your lifestyle, but keep in mind at the end of this road you will have a clean start.