Custodial Account Question?

[Aiko]

Hi Thanks for your opinions on this matter. My wife and I are filing chapter 7 soon. We are both disabled and our only income is Social Security Disability of about $2100 per month. We stopped using and paying our credit card bills in October of 2006. We have a little over $50000 in cc debt. We live in NY, Own our home,(Value $100000 -48,000 mortgage -20000 Home Equity loan = $32000 equity).
When I informed my mother that I was filing for bk, I found out that she has had a custodial account (she is custodian) for me since 1979. there is about $17000 in account. I am now 41, but did not know the details of this account. I owe her about $36000 since 1996. when she loaned me money she always said I will just take it from your inheritance, however, she never did. On November 8 she signed off as custodian, and I then signed the account back over to her.
Yesterday I got a letter from my lawyer (Legal Aid) informing me that he will not be able to file for me because of the custodial account. He offered no explanation and is unlikely to return my calls in my opinion. I beleive it is probably because my mother will be considered a preffered creditor and the trustee will want to redistribute that $17000.
My question is... Can I pay down my home equity loan (secured debt) with that $17000. or would the trustee want to add it to the bankruptcy estate also.

Thanks
Aiko

[lrprn]

My question is... Can I pay down my home equity loan (secured debt) with that $17000. or would the trustee want to add it to the bankruptcy estate also.

If you cash out $17,000 from the custodial account and file as soon as you say you are, it won't matter what you do with the money. Your trustee is going to want your share of it unless you allow at least a year, preferably two years, to go by before filing.

Suggest getting 3-4 free consultations with experienced bankruptcy lawyers in your area to discuss this problem and get answers to other questions you might have. Legal Aid lawyers are not bankruptcy experts. You need expert advice to deal with a custodial account. Even if you aren't going to use a lawyer to file, you will gain a lot of information about what your best options are under these circumstances.

Whose name is listed as the owner on the custodial account? Both of you, just your mom, or just you?