Should I sell my stock before I file?

[ColoradoBell]

I read on on eof HHH's stickys that if you have money owed to you, coming in...that you wait to file until you get that money and spend it on living expenses.

So if I have a stock worth $9k and a sort of annuity/life insurance policy that is really a mutual fund that you can take out at any time but if $8k is left in it then my beneficiary gets $50k when I die.....should I sell and spend those?
If I use them to hire a lawyer for a lawsuit defense, is that an ok expenditure?

Besides my house those two are my only non exempt assets and I haven't gotten rid of them because I thought I wasn't allowed. (Duh)...a lot of this stuff is counterintuitive.

[AngelinaCatHub]

Your life insurance policy is exempt. The cash value or loan value I am not sure of. Stock is something else. What is it in? If an IRA or retirement in any way it is also protected. I believe that the bk lawyer payment is certainly exempt. Be careful moving any monies without a lawyers advice. This would probably be answered in a free consultation when you interview (at least 3) lawyers for your bk. 'Hub

[AngelinaCatHub]

OK I missed something, I took for granted you meant a bk lawyer. Are you being sued? More info on this one now. I'm now not sure of your question on the lawyer bit. 'Hub

[ColoradoBell]

Thanks, Angelina...my question wasn't clear I know.

1. In my state only insurance is exempt and I called and this was an annuity so it's been reduced to $500 and will soon close...but waiting to find out if closing or leaving it open is best.

My question would be for a Ch 7....if I spent the money on necessary living expenses then I should be ok.....right?

2. What if I got a check in the mail and did not cash it..would I include an uncashed check as an asset on my schedules? Or if I got the check after filing would I 'amend' teh schedules or wait until I'm asked?

I don't want to do anything illegal and for some reason I thought it would be illegal to cash out my stock holdings before filing...I was surprised to learn that it is ok to do if you use that money to pay your bills and such.

[ColoradoBell]

Yes, I am being sued and I am counter suing. The lawyer I'd hired initially ran up a $10k bill that was supposed to be shared by my X who wouldn't pay. So I let the lawyer withdraw and promised him (we didn't have any contract) that I'd pay him the $2k we'd agreed upon for him to file the countersuit when I could. This lawsuit will probably stop because of filing...it is schedule to trial on June 1 and that is a bit too soon for me, so I might take advantage of the stay. I'm listing this attonrey as an unsecured debt so I couldn't pay him even the $2k and might have to hire another attorney to handdle the trial (Sigh).

I also have to pay to have someone sue for an extension of my spousal support....and that is what I'd use the money from the sale of the annuity for.
I don't think the Bk trustee could stop me from doing that, but like you said, I'd best get a Bk attorney approval.

[AngelinaCatHub]

Now that you clarified this I tend to agree. The bk would certainly stop the suit but then you also could not start one, even for support. Do you have a temporary order for support and wish to extend that? A simple motion to the Court could do that I believe. However if time is of the essence talk to the Judges clerk about an emergency hearing. I had one with a single days notice to be there. We won anyway. We took a car on a Judgment we had.

Yes holding the check would be an asset as the funds are held by the check in your name. If it is only $500 it would not matter and yes you do have to live. $600 seems to be the magic button. Keep us informed of your decisions and progress. 'Hub

[momofthree]

I don't know how selling stocks works, but even if you spend it on allowable expenses, it MAY count as income on your look-back. Check with your attorney before selling.

[ColoradoBell]

I've been divorced since 2003 and had perm orders awarding maintenance in 05. I 'm pretty sure I read that post mod of perm orderrs for support are not stayed...esp as I HAVE to file for extended maintenance before current maintenance ends, but it is a good question to ask an attorney. A fam law lawyer wants $15k to file for it...can't believe these ($%(*%*(#$ family law attorneys.

[iv65536]

I believe the stock would simply be classified as an asset, and the sales proceeds, assuming it is sold through a brokerage firm, would probably not be questioned as far as fair value is concerned. Stockbrokers, IIRC, are required to get the best price they can for their clients. I sold some stock to, in part, pay living expenses and legal fees, and even exempted a small amount I left in my brokerage acct, and the trustee saw the brokerage statement at the 341. Nary a peep from the trustee.

[BananaCabana]

We sold our stock late last year as well. Had to claim it on our taxes, of course, but only the short and long term capital gain. Only the capital gain from the sale should be considered income. At least for tax purposes. I can't answer for BK purposes but surely it wouldn't be too different, right? Considering the low performance of the stock market your cap gain may not be much. We held our stock for over 10 years but our gain was only about $170 dollars. I don't anticipate this to be an issue when we file. Any other property we sell and are making any money on I am using to take the kids and ourselves to catch-up doctor and dentist visits. That alone will eat up everything we made on the sale of our assets. And those are certainly not luxury items although a single dentist visit could run up to $3000 depending on what work needs to be done. We have a LOT of work that needs to be done. The typical catch 22. When you don't have insurance you can't afford to go. When you do have insurance you still really can't afford to go but you also can not get your boss to give you time off to go. So now that we have some money to spend we are getting cavities filled, root canals performed and bridges made.

[ColoradoBell]

Banana Cabana: are you getting this dental work done before filing?
I could use the stock money to pay for my necessary dental work, but if its just before filing, will it be frowned upon by the trustee?

[BananaCabana]

Banana Cabana: are you getting this dental work done before filing?
I could use the stock money to pay for my necessary dental work, but if its just before filing, will it be frowned upon by the trustee?

Unless the dental work is for cosmetic reasons I can't imagine that getting root canals and cavities filled would be anything but a neccessity. All the advice I have heard so far is that you should spend a tax refund on neccessities before you file. That brings to my mind paying for things that are not luxuries. Food, clothing, household bills, medical and dental appointments, even something like a needed refridgerator, stove or dryer. Going out and buying new big screen TV's, getting cosmetic liposuction, whitening your teeth, major vacations, spending money on anything that would be considered luxury would probably be questioned by a trustee. In the past six months our fridge quit working and we lived out of coolers for awhile, our stove's element burned out so we can't use the oven, our dishwasher quit, our microwave quit and our dryer stopped running. As we will be surrendering our home and I am afraid a trustee would question us purchasing all of these appliances we have only purchased a scratch & dent fridge and a floor model dryer after three months without one. The hard part for me is not knowing for sure what a trustee will really think is an appropriate thing to buy and what really isn't.

Now, after saying that, I have to also say that I have NOT asked a lawyer about that question. So I am only trying to use whatever common sense I can about that issue. My kids have not been to a dentist in over 10 years, I needed a root canal or extraction or the infection could affect my health, my son needs to see his pediatric cardiologist as it has been over a year since we had insurance so he could go for his yearly appointment. We only have so much we can protect with exemptions so any cash that I believe may be over our allowed exemptions I am using to get things we have put off for way too long. Up until last week one of my boys did not own a pair of pants that did not have a hole in them. So I just went and bought him two pairs of new jeans. With five little ones I need to buy much needed clothing for them before it all goes into rent, utilities, food, gas and other expenses that will leave very little if anything left for extras.