? about boat & cars before filing Ch 7

[lostinflorida]

My husband and I live in Florida and will be filing Chapter 7, but we will have to wait until we meet the 6 month income look back, I believe it will probably be about 3 months from now. In the meantime, I have some questions I'm hoping someone here knows the answers to.

1. We have two vehicles, we do not plan to keep either one as we are upside down in both and they are both gas guzzlers. Is it better for our credit score (after bk) to surrender them to the credit union before we start missing payments, or should we just keep them as long as we can? If we keep them, how long can we expect to have them before they come to repo them? If we miss 3 payments before filing bk, is it likely that they will come after them before we have a chance to file? I'm just wondering if there is any benefit to voluntary surrender over making late payments and letting them go in bk?

2. We also have a boat that we do not plan to keep. Same reason as the vehicles. Upside down, with economy like it is now, it makes no sense to have a boat, we just want to get a fresh start on life and not make the same mistakes again. Does surrendering a boat (or repo) proceed the same as a vehicle?

3. Does unemployment compensation count as income? I saw it listed as an exemption but dont understand why they wouldnt count it as income.

4. My husband and I are both now on unemployment. I have been since March and he just started. Will we be required to have jobs before we can file? If so, will they require both of us or just one of us? Of course, we do plan to get jobs again, but for now, having as little income as possible will help get us to the state median income faster.

[lostinflorida]

Forgot a question

I know that we are going to start receiving phone calls since we can no longer pay our payments, and we will deal with that nightmare as it comes. However, will bill collectors try calling family members or friends and neighbors who may have been listed as references on loan apps? I'm hoping that they won't call any of them if we take their phone calls, but if they start calling non stop like I've heard they do, I may be tempted to turn my phone off and will that cause them to start trying to call others?

We don't have a home phone, only a cell phone and I also worry that they will put us over the limit on our minutes, how did you all handle that part of things?

[Help!]

My opinions:

1. Time to repo varies. If you are above median, creditors may wait to see if presumption of abuse arises and your case is likely to be dismissed. It is easier to talk you into reaffirming debt on a car if you're dismissed and in a state of exhaustion/panic. We are 60+ days past due and no efforts to repo. have been made.

2. Boat and trailer are treated just like vehicle. I think the repo is likely to take longer as it is not as easy to come get a boat. Again, if you're above income they may wait to see which direction your case goes.

3. Yes, it is counted as income on the means test. Every amount of money that you receive (even eBay sales, tax refunds, one-time bonuses at work, etc.) can be counted as income. A good rule of thumb is that if it's money you'd have to disclose on your income taxes as income, it's income on the means test, too. An attorney may tell you otherwise (as ours did), but it can become an issue that gets your case dismissed later (as ours is).

4. Not for Ch. 7. Make sure you have documentation showing you and hubby are actively pursuing employment right now. Save online applications, emails, copies of applications and keep them safe in a folder.

My advice is to document absolutely everything you do with your money before you file and put it into a bound notebook. Don't count on your memory... you may be asked questions at your 341 hearing and you don't want to make guesses about the details.

Good luck!

[keepmine]

Nothing in the code requires you to be employed when you file. However, I'd recommend you not file until, one of you has a job with health care benefits. You don't want to file and than post bk, someone gets sick and you have major medical debt you can't discharge.
Best way to keep creditors from calling others is, stay in contact with them. Tell the truth-nobody has a job and you're doing good to keep body and soul together. Don't get into long conversations. Just say I'm unemployed and I'll let you know when my situation changes.

[lostinflorida]

What about cashing out stocks?

We have two stocks that I had planned to sell, they have lost value. We have had them for around 5 years, nothing big. Originally one started out at $1000 and is now worth around 700, the other started out at $2000 and now is only worth about $500. I was going to sell them and use the money to buy groceries, pay light bill, etc., will that count towards income as it's actually a loss over their original value? I've never sold stocks before, so don't know the process on reporting the sale on taxes, but I don't see how it could be considered as income since it is really a loss. If we leave them where they're at,won't the bk court want them anyway?

Thanks for the help on the other questions too by the way! Us regular people who can't afford a fancy lawyer need sites like this to help guide us along the way!

[AngelinaCatHub]

Yes, they would probably be considered income if you sold them. If you hang onto them, even though they are losing value, they will be considered assets. In our 341 meeting, I remember being asked specifically if we owned any stocks or bonds.

[AngelinaCatHub]

Rethinking, when do you intend to bk? IF you purchase exempted stuff such as food and blankets, etc. you may be able to do that. However, I would do it 90 days before filing, KEEP ALL RECIEPTS. DO NOT fail to declare this sale on your paperwork. 'Hub

[lostinflorida]

Most likely will file in 3 months

If things go as I think they will, we will probably not file for about 3 months. So are you saying that we could sell the stocks now and use the money to buy food, etc. and it would be okay?

Also, I just started panicking wondering about our 401K and IRA's. I think they are protected under Florida bk law, but now am second guessing myself. Anyone know?

[keepmine]

401K's and IRA's are exempt assets per federal bk law and off limits to creditors.
It'll be OK to sell stocks to pay ordinary living expenses or, pay your attorney. People do that all the time-sell assets to pay bills. Just disclose it and, be able to show where the money went if asked.

Have you consulted with any lawyers?

[lostinflorida]

Do I include it when trying to calculate 6 month income

I'm so confused. So if I sell the stocks and use them for expenses or for bk atty, do I still include the total received as income when calculating our 6 month income?

No, haven't consulted an atty yet, so far this site has been my only source of info.

I really don't understand this 6 month income thing. What difference does it make what you USED to make, if circumstances change and you are now only receiving unemployment, you can obviously not pay the bills that you have.

[keepmine]

I really don't understand this 6 month income thing. What difference does it make what you USED to make, if circumstances change and you are now only receiving unemployment, you can obviously not pay the bills that you have.

It's part of the process. The means test requires a 6 month lookback. And yes, the stock sale will be considered income.

Most bk lawyers give either free or low cost initial consultations. Talk with a few and see what they say.

[AngelinaCat]

I really don't understand this 6 month income thing. What difference does it make what you USED to make, if circumstances change and you are now only receiving unemployment, you can obviously not pay the bills that you have.

My Friend, I heard you LOUD and CLEAR! Your question is EXACTLY what our EX-BK attorney should have instructed us in, but did not. At the risk of reposting what we have said over and over, please search our nicknames, 'AngelinaCat', and AngelinaCat'Hub' for some of our gory details--especially the last two week's worth of posts.

My VERY BEST advice to you, at this point, is to go to www.nolo.com, and purchase the Ch. 7 BK book. I got an online downloadable version in April that was around $18.00. It comes in a PDF file. The downside is that you have to print part or all of it yourself. Still, purchasing from NOLO Press will save you some money over what the standard bookstore price is. BTW, when they offer the 'freebies', ALWAYS take the 'freebies'. They are helpful too.

I could go on longer, but no. Please BUY the book first, and READ it. Many of your questions will be answered there.

Best wishes~~~

[Help!]

Yes, they would probably be considered income if you sold them. If you hang onto them, even though they are losing value, they will be considered assets. In our 341 meeting, I remember being asked specifically if we owned any stocks or bonds.

Yes, definitely income. Regardless of what their value was/is, if you are taking a distribution it will be counted against you on the means test. There's no grey area on that question.

[AngelinaCat]

Yes, definitely income. Regardless of what their value was/is, if you are taking a distribution it will be counted against you on the means test. There's no grey area on that question.

[Help!]

Yep, did the same with stock options and 401K. At least no one can accuse us of gaming the means test. I sometimes wonder if the trustee is thinking "What idiot empties out their 401K and then files BK?!". We couldn't have picked a worse time to file. I think I was your classmate there, voted "most likely to be dismissed".