Timing of our filing date??

[iambroke]

Hello,
We are trying to decide the best date to file for chapter 7 and would welcome advice from those experienced with the process.

Our situation:

-Income for past 6 months= $14,000.00 (plus $9,000.00 for my SSDI-which is not counted by bkcy court)

-Credit card use in past 3 months= $15,000.00 (yes, I know- crazy)

My husband has been working only part-time for the past six months (he took this work thinking it would be full-time). He has just been offered a permanent job earning about $56,000.00 annually. He may be working both of these jobs and potentially could earn near median.

We are trying to decide whether or not we should wait to file after the 90 day period to avoid the credit card issue (red fraud flag?). However, are we
better off filing while he is still employed only part-time? My
husband wonders that since we are still under median income
that his new employment will not matter. Or will they still want to convert to a chapter 13?

We are tempted to have him wait to start the job until the first of the year and file just before that. (we would still be subject to being
scrutinized for about $9,000.00 in credit card use during the 90 day period prior to filing) Or are we better
off waiting the 90 days to file even tough at that point he would have
been employed both full and part time and our income would be close to
or over the median? (median income for our area is 78,000.00 year). I have recently stopped paying on those cards and
we are worried that if we wait too long that we'll be sued and then
have a judgment (lien) against our home.

I understand that I cannot receive legal advice here. I am just
looking for information based on other peoples experiences that may
have been similar to ours.
Thank you,
JMA

p.s. I should also mention that the credit card use was primarily for
necessities, however, we did spent about 2-3 thousand on Christmas
presents/giftcards and are worried that this can be used against us.

[lrprn]

Welcome to BK Forum, IAB - glad you found us! Let's go through your questions one by one...

-Credit card use in past 3 months= $15,000.00 (yes, I know- crazy)

Most lawyers would recommend two things - (1) if you are certain you are going to file, then stop paying your non-secured debts like your credit cards, and (2) stop charging on your cards immediately. It's best to allow 90 days to pass with no charges before filing. If you can't make it on what you two make when you don't pay your cards and unsecured loans, then bankruptcy isn't going to help you that much.

We are trying to decide whether or not we should wait to file after the 90 day period to avoid the credit card issue (red fraud flag?).

The worst case scenario here is that one of your creditors will object and the court agrees. Then you would owe that creditor the entire amount you owe to them when you filed. The rest of your creditors who didn't object would still be wiped out.

However, are we better off filing while he is still employed only part-time? My husband wonders that since we are still under median income that his new employment will not matter. Or will they still want to convert to a chapter 13?

It's the income your husband made for the last six full calendar months before you file that matters. What he might make in the future doesn't matter if you file Ch 7.

It's the six month calculation that matters. Depending on what that is, he may be able to work a few months in the new job and you two may still come in under the median. You have to do the income calculations to be sure.

I have recently stopped paying on those cards and
we are worried that if we wait too long that we'll be sued and then have a judgment (lien) against our home.

Most creditors give you at least 3-4 months before passing off your debt to a collector or writing you off. You likely have at least six months before a national creditor would head to court. A local creditor may move faster than that.

however, we did spent about 2-3 thousand on Christmas
presents/giftcards and are worried that this can be used against us.

The trustee typically looks for purchases of luxury and high ticket items. Doubtful you have anything to worry about from the trustee here. More likely you'll have creditor objections due to the recent charges.

This may be hard to hear, but it's time to wean yourselves cold turkey off your credit card use. Start a "cash and carry" lifestyle to see exactly where your money is going.

If you stop payments on your cards and any other unsecured debt and you still don't have enough money to live on without charging, then you really have two choices - make more income or reduce expenses. There's just no other way. After you file, your cards are likely going to be cancelled.

You need to start living within what you two make. That's crucial so you don't find yourselves right back in the financial hole again, but not able to file Ch 7 again for eight years.

[SinkingFast]

-Income for past 6 months= $14,000.00 (plus $9,000.00 for my SSDI-which is not counted by bkcy court)

Be sure to ask attnys if this is indeed the case. That your SSDI will be Exempt.

Often times, various types of incomes that are otherwise Exempt are factored in when determining Disposable Income for BK purposes.

[lrprn]

Be sure to ask attnys if this is indeed the case. That your SSDI will be Exempt.

In this case, since SSDI is Social Security related, the Means Test specifically excludes it on Line 10 - "Income from all other sources. ... Do not include any benefits received under the Social Security Act..."

Here's the link to the current Ch 7 B22A Means Test form - http://www.uscourts.gov/rules/BK_For...m_22A_0407.pdf

Of course, it's always best to check with your lawyer to be absolutely certain.

[iambroke]

Iambroke

Hello,
Thank you both for your responses.
I did check with the lawyer today about several of the questions I asked here.
He did confirm that my SSDI will not be counted.
He also suggested that we wait the full 90 days with no cc activity.
as far as the job is concerned he assured us that even if my husband is earning 60K a year, that we should be fine on the means test since in 3 months from now our total income for the 6 months would be about 25K which is below the 38K for six months.
Thanks a bunch!