Can I pre-pay moving expenses before filing chapter 7?

[Loreli]

Background: My husband and I opened a lovely gallery on the coast of maine in 2007. He continued working his full time job (and still is working it.) Everything was going great, exceeding sales projections, etc until Sept 2008 when everythin, went to h*** and sales plummeted ( no one wants to buy art during a depression . We tried to stay open and limp through but all of our lines of credit were either closed, interest doubled or credit line completely removed. (We had credit scores of around 800 and have not had a late payment on any single thing in 18 years!). We own our house and stopped making payments 12/1 as our roof is now leaking everywhere and we have no $ or credit to make repairs. We have gone through most of our savings except about 1400.00.

We closed our storefront and went completely online, but that is just limping along. We realize that now we cannot pay off the debt and will be filing chapter 7 and surrender our house in bk.

I can't find any work here, can't even get an interview. We decided to move to Colorado where we have family and more possibilities for me to find a job.

My question is, can I prepay my moving expenses (budget truck rental, 3 motel room nights during the move, prepay gasoline by buying gift cards, etc,. before filing? We have 1700 in our business checking from sales from this christmas season and were going to use it to pay for bk attorney and fee. I will have to give up all the inventory to the trustee I know.

Will this be looked at as a red flag (the prepaying thing)? How much cash can you actually have on hand when filing that you can keep? We're going to need every cent to move and survive until we find jobs. How can I plan for this appropriately and legally?
Thank you for this forum!

Sad, but resigned.

[lrprn]

First, I'm very sorry to hear about the loss of your business .

It sounds like most of your debt is tied to the business, so you may not have to go through the Means Test to file. Have you had 3-4 free initial consultations with experienced Maine bk attorneys yet? If not, that's the very first step you should take. Find an attorney that has a lot of experience filing with a business involved - that's going to be key in your situation.

The issue here is how much cash your Maine bk exemptions will allow to be on hand when you file. Chances are it's going to be less than you need to have on hand to move, so how best to deal with this is a very important question to ask during your free interviews.

You do have an additional option you may not have considered yet. You can move to Colorado first, spend the cash required to accomplish the move, and then after 91 days to establish legal residency in Colorado, you can file Ch 7 in Colorado using Maine's bk exemptions. That way you can have your 341 in Colorado with no need to go back to Maine for your 341. It is a bit trickier because CO bk attorneys won't be as familiar with Maine's exemptions, but it's still do-able. This sidesteps the entire "having enough money to move" issue because the money will already be gone before you file.

Again, you need to get some sound legal advice first in Maine before making any decisions. Keep asking questions here - we'll help you sort things out as best we can.

[Loreli]

Thanks for the condolences It has been difficult to give up my dream!

We have met with 2 attorneys, and one of them was extremely knowledgable. He actually did suggest the filing in colorado. The problem with this is that my husband needs to continue working at least 3 more months so we can save the money to move (rental deposits, survival expenses etc until we both find jobs.) The 91 day rule is what messes us up. We can't allow our home to go to fc sale before we can legally file. In Maine it's about a 4 month process. That would put it very close, or not do-able at all which I don't think we can risk. Also would run the risk of creditors filing a judgement during that time which wouldn;t be dischargable, am I correct in this?

As far as the residency, I had wondered if I could move there first and establish residency while my husband stays here and continues to work. Do both of us have to be in the new state to establish residency?

First, I'm very sorry to hear about the loss of your business .

It sounds like most of your debt is tied to the business, so you may not have to go through the Means Test to file. Have you had 3-4 free initial consultations with experienced Maine bk attorneys yet? If not, that's the very first step you should take. Find an attorney that has a lot of experience filing with a business involved - that's going to be key in your situation.

The issue here is how much cash your Maine bk exemptions will allow to be on hand when you file. Chances are it's going to be less than you need to have on hand to move, so how best to deal with this is a very important question to ask during your free interviews.

You do have an additional option you may not have considered yet. You can move to Colorado first, spend the cash required to accomplish the move, and then after 91 days to establish legal residency in Colorado, you can file Ch 7 in Colorado using Maine's bk exemptions. That way you can have your 341 in Colorado with no need to go back to Maine for your 341. It is a bit trickier because CO bk attorneys won't be as familiar with Maine's exemptions, but it's still do-able. This sidesteps the entire "having enough money to move" issue because the money will already be gone before you file.

Again, you need to get some sound legal advice first in Maine before making any decisions. Keep asking questions here - we'll help you sort things out as best we can.

[lrprn]

As far as the residency, I had wondered if I could move there first and establish residency while my husband stays here and continues to work. Do both of us have to be in the new state to establish residency?

Check with your Maine attorneys first, of course, but others here have faced this same situation and shared that only one of them had to physically be in their new state for 91 days.

If you do move to Colorado first with your husband following in a few months, all that has to be done is for both of you to establish your new CO address as your new legal address as a couple. The fact that your husband is still working in Maine shouldn't matter. Many couples who file bk work in different states even when they don't change addresses or states before filing. That's all you two would be doing.

[Loreli]

That might solve the problem. Of course the other is that I would need to get a job to afford a place to live, etc which would increase our income and possibly might make us be above the means? Obviously my husband and I can't live apart forever--seems it would be bad for the marriage thing . How do they look on someone quitting their job (granted in another state) before filing bankruptcy I wonder?

Would I be able to come back to Maine after establishing residency there by getting a driver's license and having a colorado address? I can't leave my husband with an entire house to pack and garage sale and move, etc. I've tried numerous searches to these weird queries and can't seem to find anything. BTW, your first response asked about the Maine allowance for cash exemptions, none of my searches have been able to answer this question. (we met with attorneys in November, so I didn't feel comfortable calling him again and asking questions when I haven't officialy retained him.)

Part of me just wants the whole thing over with...starting a new life in colorado without all this excess baggage, but I know I have to look at this like a business decision...

[jlmaca]

Loreli I've been reading the posts with interest as I am a Mainer down south. I filed Chap7 in September soon to be dishcharged. I have not even received a notice of deficiency from my mortgage servicer as of yet. They still just call me oblivious to the fact I filed. I'm staying as long as I can to save money also. You have a unique situation and I hope it works well. My 2 grown children are moving to Colorado. My son has checked out job prospects and cost of living and was really surprised how much better off they will be in Colorado. I'm sure you'll miss the Maine coast somewhat but good luck and I hope everything works out for you guys.

[keepmine]

Don't be in a rush to file.
Any judgments fromcreditors are discharged in your bk.
Why can't you let your home foreclose before you file?