Ch. 7 - Spending 'extra' cash during filing which would normally be paid to creditors

[blucat13]

I did an initial consultation with a lawyer about filing Ch. 7 yesterday. I want to surrender my house and get rid of $12K in credit card debt. I can't sell the house without going $25K further into debt if I sell it. A Short sale will still put me into a situation where I couldn't afford the additional debt, so I decided BK was the best solution.

My question is, I was told once I file to stop paying everyone, house, cc, etc. However, this puts a certain amount of cash in my pocket each month, since I am not putting that money toward those bills. My lawyer told me it CANNOT be gifted to anyone, and it cannot be put into savings or I will lose it. I am supposed to wait to set up personal savings, savings for my son, etc until after my discharge. So, we are talking about probably $1000 a month until the BK is discharged.

I am a little unclear on what exactly I can spend this money on. All he said was anything but luxury items like jewelry or boats, etc. What things are considered ok? Rent? Clothing? Eating out? Swim lessons for my child? Furniture for the house I will be living in? It seems weird to have to spend it, but I am guessing he wants clear records for the Trustee of where the money is going?

This was all a little unclear, so I am hoping someone can give me an answer. I searched the forums and couldn't find info on anything quite like this.

TIA!

Tami

[BROKENN]

Hi and welcome! You can use it to pay regular expenses. I caught up with utility bills, had to pay some much needed medical and dental on the family, we had a car repair etc.

Hope that helps!

[TEW]

I did about the same as brokenn I am also putting money away so i can move when the take the house I have a dental bill i am paying off and a couple things like tires for the car. you'll be surprised the money will go. remember to put some in an emergency fund!!! you will not have credit cards to bail you out now.
Thing you need to live on. clothing is OK rent sure I would hold up on furniture but that's me I am trying to get rid of that stuff.
Welcome to the forum these folks are great

[blucat13]

Unfortunately, the problem is that my attorney told me I could NOT put it away for later, I cannot put any into savings or even into my 401K or the Trustee will seize it and use it toward my debts. The attorney said to be prepared to spend it on non-luxury items like clothes, tires for the car, paying car insurance for the next six months, etc. However, I can do all that and still have leftover, so I am looking for ideas for things I can use this money for, without the purchase being considered as a luxury.

My car is fairly new, so it doesn't need repairs of any kind, (will continue to pay on that debt) my main overwhelming expenses are my house and CC and I will be getting rid of those through the BK. I will feel very fortunate if I can see those disappear, and be able to save money for myself and my son, which I cannot do at all right now.

I thought it was supposed to be a good thing to be able to stop paying those CC and the mortgage and have that extra $$, but it's strange to have to worry about what to spend it on while the BK is still going on. I would love to sock it all into savings.

Tami

[debtmonster]

I know, I am in the same boat. It's like it's a catch-22.

I'm going to try to pay my house and a few other bills until about 90 days before we actually file. Then all of my extra money will go to paying monthly payments to the attorney, plus I owe back self-employment taxes for not putting away any money all year. I can easily spend every penny and not have two nickels left over.

[willowhare]

Rent, food, clothes

I've been told to use this money to catch up on things I couldn't afford to do while I was paying the CCs. Essential clothing and shoes that need to be replaced, car repairs, and the big one, dental care.

Take the whole family in for dental exams. Take them in for regular health exams, too. Check out your winter clothing from last year. I'm willing to bet your son may have outgrown his coat and boots. If you are keeping a car, get it checked out by a mechanic and see if there is anything on it that needs to be fixed immediately.

Not only will these actions burn up the cash, but I think that they will give you a better look at what you really should be spending your money on these essentials, so you can make better estimates of your monthly expenses on the means test.

And lastly, if I read all the forms and such correctly, you don't have to claim food. Stock up on canned goods, flour, frozen stuff if you have a chest freezer, and seeds if you plan to start a garden next spring. Just avoid anything that can be preceived as a luxury or investment--30 year old scotch, fine wines, etc.

[hopingforsanity]

Even without paying the credit cards, I still find my self struggling each month. I would like to get a part time job at night to help.

[TEW]

I think there is some misunderstanding here. You can save money after you file. It's not a good idea to have maybe more then $100 before that day.
But you will be surprised where the money goes. You are now livening on what some of us once just charged.
in my case we are trying to save so we can move and got out of this house. The bank says stay DW wants out. I don't care. BUT getting the money together to move is not being as easy as you would think.
My wife had surgery we have insurance but we have co pays 30 here 20 there 100 there it goes. I am paying my dentist off 500 so that’s a drain.
Utilities I had to pay a deposit and 2 months I did not pay so I could pay the lawyer. Water, gas, electric, gasoline and food. Over 1000 in a month

[Mi Bankruptcy]

I was wonder this also. I should actually be filing next month and my lawyer expects our our 341 to be at the end of December. So, with what little extra we have... would it be bad Christmas shopping for kids? Heck, we have been so poor(poor in American terms) that we have not been buying Christmas or birthday gifts for each other. However, I would be nervous about going to the 341 with my updated bank statements and having debit charges for stores we would not normally shop at.

[TEW]

I was wonder this also. I should actually be filing next month and my lawyer expects our our 341 to be at the end of December. So, with what little extra we have... would it be bad Christmas shopping for kids? Heck, we have been so poor(poor in American terms) that we have not been buying Christmas or birthday gifts for each other. However, I would be nervous about going to the 341 with my updated bank statements and having debit charges for stores we would not normally shop at.

MI how about an emergence fund. have you started that yet? I have a couple of hunderd in one but it is not going to be touched.
part of this for me is to change the way i think save first my first BILL is the saveings acount. that is not going to be touched for christmas birthdays or what ever.

[Mi Bankruptcy]

MI how about an emergence fund. have you started that yet? I have a couple of hunderd in one but it is not going to be touched.
part of this for me is to change the way i think save first my first BILL is the saveings acount. that is not going to be touched for christmas birthdays or what ever.

TEW,

We have not filed as of yet. We officially file next week. Our attorney is paid in full. So, to put money aside in a savings account would only hurt us because the trustee would take it. Unless I am missing something?

However, it's the Christmas season. We have 3 kids. I just wonder how it's going to look to see all these charges on my bankstatement. I denfinitely want to account for all of my money so I am reluctant to only use cash rather than a debit card( even though I consider it the same)

You are right about the savings. I can't wait to start socking money away after this BK is completed.

[paintinrosesred]

We will file right before xmas and we've already told the kids they get ONE present each this year. And they are small kids... sad but necessary... We plan on going somewhere local christmas morning so we don't sit around the empty christmas tree (or lack of tree). Our life will be so much better after the BK that it will be worth it.

[albacore44]

What about just stashing the extra cash in a safe or under a mattress so you have it in the future ??

[Mi Bankruptcy]

I thought of that. However, I don't want to make the problem worse by hiding anything. I the type of person that if odds are 100-1 that I would get away with it.. I would be the 1.. So.. I am playing it straight so I can go in there with a clear con-science.

LOL.. If I was going to roll the dice.. I would have did it BIG.. :o)

[WharffRat]

My retainer was $3,500.00 So I never had a problem with that.

Do things that need to be done, fix car, new tires, deposit on new place to live, etc....
Things that are not considered fraud in the governments eyes.