How would you "plan" a bankruptcy?

[DownNotOut]

I have been reading on here for weeks now and learning quite a lot from all of you! It is a wonderful resource!

What I have noticed is some of you have "planned" your BK. So, if you were one of those people, what did you do to plan?

If you didn't plan, but wished you had, what would you have changed?

If you knew you were going to file in about 6 months, what steps would you take starting now?

[Kkole425]

I also have this question. I am saving what I can which seems like nothing right now. I just want to get this over with but know we are not even close to being ready to file. BUT I don't know what to do to get ready. Great question. I love this board!

[OhioFiler]

I also have this question. I am saving what I can which seems like nothing right now. I just want to get this over with but know we are not even close to being ready to file. BUT I don't know what to do to get ready. Great question. I love this board!

If you don't know what to do how do you know you're not ready to file? First thing to do is complete a means test. Then complete your schedules I & J. Prepare all your paperwork needs (bank statements, cc statements, paystubs, etc). Begin budgeting for the "fresh start". Look at your secured assets and determine if they should be kept or surrendered. If surrender is the best way to go how will you get by without them?

Oh...and keep reading here daily!

[AfraidOfBK]

can you get a schedule i and j without lawyer, just to be prepared? if so ,where or how?

[keepmine]

You can download forms from your district's website or, fill this out to get a reasonable idea of MDI.

http://www.legalconsumer.com/bankruptcy/means-test/index.php

Once you have an idea if you qualify for a 7 then, understand you state exemptions.
The idea now is take any nonexempt assets you have and convert them to exempt.
Things like IRA's.
Another thing to do with excess cash is pay things that are a priority that will survive bk like, back taxes or court ordered child/spousal support. These will get paid before unsecured creditors anyway so, no preference issue.
Finally, be sure you have reliable transportation. If you need to finance a car-do it now. Same thing if you need a place to live or a bank account. Take care of it now.
JUst a few thoughts. Others will weigh in with ideas.

[AngelinaCatHub]

DownNotOut: You do not plan your bankruptcy. You realize it. When you do your best, then find out due to many causes, health, ignorance, poor planning, and many reason, then you realize the reality of what has to be done. It is truly a business decision, but I also call it “healing”.

The best thing you did for “planning” for the inevitable, is finding this place. No one “plans” on screwing over those who have loaned them money. Yes at times advantage has been taken of the populous, but for the most part, we go in with eyes wide open.

The best resource I have found is on Nolo.com website for the Chapter 7/13 book. Two books whatever you’re planning. About half price download in PDF format about 17 bucks or so. They always give you a bonus book that is good. It varies. This C7 book has all the forms and very good information. I would have gone pro se if I knew of this place and that book before my demise (in my own head).

You have made the best decision at this time. “The first step:”. Congratulations. ‘Hub

[chad9162]

I have to disagree with Hub a bit. I'm new to the forum too and didn't understand the "BK planning." It has nothing to do with "fraud" but simply financial planning. But here's what I've figured out so far.

BK Planning 101
1. Understand the difference between Chapter 7 and 13.
BIG DIFFERENCE!

2. Understand the Means test (This is the difference between Chapter 7 or 13).
If you're under the median income then you can file Chapter 7 (usually people's first choice). If you're over the median income then you need to throughly understand the means test and in a sense "plan" to past it. Since "CMI" (Current Monthly Income) is the average of the prior 6 months before filing you need to understand how that one-time bonus could affect your means test. One month could make the difference of passing or failing. Income is only one example of the means test and planning.

3. Understand what exemptions you get, it varies from state to state. Some of you might actually lose property or have to pay the trustee.

4. Understand what preferential payments are and the consequences of transferring property to family members. Don't try to hide assets, that's what the trustee is looking for.

5. Figure out how BK is going to affect you....like is your current bank going to freeze your accounts because you owe them money (maybe time to change banks) or should you buy a new car before filing etc...

6. Understand presumption of abuse. Some districts are stricter than others. Some are willing to negotiate anything.

7. Meet with a lawyer, even if you choose not to use them you can get insight on how your district treats things. Ask for referrals here (that's what I did). If you keep reading you will learn that every district (or court) treats certain things differently, like Paypal Accounts.

8. Can you survive without credit. Meaning can you live on cash, your current income. If the answer is no then BK isn't going to help you.

9. Understand the process (filing, 341 meeting, 60 days to discharge, etc). The more informed you are the easier and less stressful its going to be.

Good Means test calculator...(mines prettier)

http://www.legalconsumer.com/bankruptcy/nolo/

Also....

http://www.nolo.com/article.cfm/objectId/8400442E-EEE8-4479-A8D109AFB7E2E9CA/catID/283B9600-ECC3-49ED-9D9A20A3E13F42E0/213/161/128/ART/

Again this is not fraud but simply planning. You know that saying, "No one plans to fail but ...."

Funny story....After paying all my credit cards last month over $800....I had an epiphany. I realized I was paying my credit cards so I could use them, "floating money." I realized this terrible cycle would never end and it was time to BK. If I would of known what I knew now, I would of saved that $800, instead of using my credit cards again. Hope this all makes sense.

[Recessionist]

It helped me to read the Tactical Bankruptcy Manual

http://www.bkforum.com/showthread.ph...kruptcy+manual

[2cents]

All good posts. As mentioned earlier, I would start by unerstanding exactly what a Ch 7 BK is and what it can or can't do for you. You can find this information on tons of internet sites which explain the basics very well. You can then refine your search to your particular state to find out about things like exemptions and the means test. If you fall below the median household income for your size family in your state, you should be able to file Ch 7. If you make more than the median in your state, then you need to look at the means test to determine if can still qualify for a Ch 7. If you are unable to qualify for a Ch 7, then you will probably end up filing a Ch 13. You can learn about 13s on numerouse sites as well. But defenitly start learning all you can about Ch 7 first.

I don't have one, but I kow that in an above post, someone mentione the Nolo.com book site where you can buy a Chap 7 BK book. Everywhere that I have read on this forum says that this book is a great tool to have.

Next, I would make an appointment with at least three different BK lawyers for a free consultaion an ask them good, well thought out quetions. There are threads on this forum that list some very good quetions to ask an attorney at your firt meeting.

These are some of the very first moves I make. Bone up on Ch 7 BK law and get yourself moderately knowledgeable about what it is and how it works. Therefore, when you go to meet with your atty, you will have a good idea of what to ask him/her.

And, as this process continues over the next few weeks/months, stay glued to this board and you will learn even more here from others that are not only smart, but have already been down the road that you are beginning to journey down.

[TEW]

No BK planning has nothing to do with fraud...
1. BK planning has everything to do with you fileing what every chapter you believe is best for you with success.
2. planing the BEST fresh start for you and your family.
3. Education understand the proses. understand what it means to have your debt discharged. And what I think is the most impotent is how did I get in this situation. How not to let it happen again.

[LuciluS]

Although we quit paying our Credit Cards late 9/08 & our Attorney wanted us to file Dec. 08, he just glanced over our Income on the Excel Spreadsheet when he told us 'Yes, it will be Chapter 7'.

Hubby found this Forum in Oct. 08 & I was receiving a 10 yr. payout on a QDRO (my 1/2 of ex-husband's 401k plan) & it was Taxable Income. Last payment was in Feb. 09. So I delayed our bankruptcy until 9/09 using Mar.-Aug 09 Income. I've spent days on days reading & using the 'Search' seeking information relative to our Bankruptcy.

Also, I never kept receipts when shopping. Now, I will have 11 mths. of actual receipts to document our expenses. Hubby is an OTR Truck Driver & he never kept his expense receipts as IRS allows 80% of $52.00 for every night he spent in his Semi, But not the Trustee. Attorney told me in Jan. 09 he needed at least 6 mths. of hubby's receipts.

I could have purchased a program like Quicken to keep up with our expenses, but instead, I use 'Excel' & have Monthly Spreadsheets for our Utilities, Household expenses, Gasoline and so forth & I'm attaching the receipts for each month.

Our medical expenses our Astronomical. I have two large file folders with the Medical Bill, what insurance paid & have attached a copy of the cancelled check to each expense & will have an Excel Spreadsheet with a total for the past 12 mths (Sept.08-Aug.09).

Documentation of Personal Property as I inherited a lot of 'old furniture'.
I have 5 yrs. worth of Bank Statements, Credit Card Statements & Purchases and Sales of the 3 homes. Also, a copy of Title to my car (paid for) & Loan Document on hubby's truck. Copies of Life, Cancer & Accidental Death Policies. Attorney asked for an Itemized list of CC purchases over $500 for 5 yrs. So again, Spreadsheet for each CC we used.

Trustee will probably not request all this info, but I will already have it, if need be. If he ask for it, he will be buried with Paperwork! I was an Accountant before a car wreck on 3/14/05 and I'm now 100% disabled. The detailing of information is still processed in my Brain LOL!


Luci

[StartingOver08]

In addition to the above, what many people do not realize is you need to have copies of your 2 yrs bank statements, 2 yrs cc statements, insurance, mortgages etc going back for several years.

Some of these statements are not available to you if you are currently 'paperless' and did not save your information to your hard drive while you were current. As soon as you are behind in your payments, your access is cut off electronically. When you file, your access is cut off immediately.

If you have all of the documentation saved, then IF your Trustee requires the info, you can print off the requested documents. The panic occurs when the Trustee asks for documentation and you can't provide it! This simple step of organizing all of your records, not only for the filing, but so you can budget properly, will save you a lot of aggravation during the BK preparation time, during the BK and while you are budgeting.

There are many posts where the Trustee does not require any documentation. Those are usually the below median, simple Ch 7 BK's. However, there are quite a few posts where the Trustee requires documentation and the debtor simply has none because they were caught unaware. Those are the people that risk dismissal, or conversion to a 13 - whether it is justified or not!

[fltoo]

Good idea for planning regarding StartingOver's post.

Although you might never need them, it is a good idea to get all the documents she suggests NOW while you have access.

This is a huge part of planning so that you don't go into a panic attack if there are problems of proof later.

[albacore44]

Good idea for planning regarding StartingOver's post.

Although you might never need them, it is a good idea to get all the documents she suggests NOW while you have access.

This is a huge part of planning so that you don't go into a panic attack if there are problems of proof later.

One nice thing about this forum is seeing what everyone else goes through so you can get yourself ready way in advance. I spend a couple nights a week getting documents, putting them in notebooks, building spread sheets. If I had managed my finances like this in the 1st place I probably would not be in this mess.

[pookieny]

I would stop working overtime for 6 months before filing or try and reduce my pay to make sure I am under the median. I just made it by $22.