Ch 7 - Beginning process - Need help. I'm scared.

[SheSurviving]

I just want to say thanks in advance for any info offered.

Ok, here goes.

I retained a lawyer yesterday to file Ch. 7. I am in the process of gathering my paperwork and filling out forms. I'm in AZ alone, no support system, no family... I am very overwhelmed.

I am recently divorced. I'm in AZ and we have been trying to short sale our home, the buyers backed out last week Wed. We have a 1st mortgage (protected under anti-deficiency laws in az) but have a 2nd of $49K which I know even if it was forgiven, BoA can still peruse and try to collect, file a judgement, garnish wages, taxes, etc. This is the MAIN reason I am filing.

I get no spousal support, have no other form of income expect my job. I am able to pay my bills, rent, car, one CC, utilities, food, etc.

I have been not spending much except for living expenses and have money saved, $1600.00 of which will go to the BK atty. I have about $2500.00 more in the bank as my safety net (I have health issues and never know what's going to happen), but was told I have to get rid of most of it because the day I go to court, I can only have $150.00 in my acct. This scares me to death. How does one do this? Since I am keeping the car that has a loan, can I double up payments? Can I pay my rent 2 months in advance? Utility bills too? None of my clothes fit since the divorce, can I spend some to purchase clothing for my job (within reason)? What will the trustee frown upon? I know you can't make any purchases of $500. I am just terrified.

Also, my EX has removed himself from the whole house selling process, so he's not involved really and this is all laid at my feet. I am afraid to tell him however because we carry joint debt (the home) he will be notified anyway. I'm just really scared....

Does anyone have any advice on how to proceed?

[keepmine]

Here are Az.'s exemptions. I don't see the $150 figure mentioned.

http://www.thebankruptcysite.org/exemptions/arizona.html

Sure, go ahead and buy new clothes and stock up on food.
Go to the dentist, get new glasses.Make sure all necessary auto repairs are taken care of. Need new tires,etc. Ask yor lawyer about opening a HSA.
I'd not double up on car or rent payments unless your lawyer says it's OK.
Also, you can't make charges for nonluxury items of over $500 on a cc. You can spend whatever you want since it's cash.

DOn't panic. It'll be a long time before anyone sues you. Yake your time and set this thing up the right way.

[SheSurviving]

I think this is it?

33-1126 - Proceeds for sold or damaged exempt property; prepaid rent or security deposit to lesser of $1,000 or 1.5 times rent (only if not claiming homestead); bank deposit to $150 in one account.

I guess I don't understand the meaning of exemptions in this context.

[Silver26]

Its 150$ for a single filer and 300$ for a couple. Anything over that amount on the day you file will be taken by the trustee. You need to talk to your attorney about how to spend the excess down the correct way.

[JackBondLove]

You need to spend that $2500 (down to $150 at least) as whatever you have on the date of filing will get confiscated from you. This is the price to get a full discharge in Chapter 7. Stocking up on food, and taking care of other necessary things are OK. Even better yet, stock up on necessary non-food items like toilet paper, since you can always get food stamps, but you can't get toilet stamps. Is your car ready for maintenance - you can gig it up a bit and get it done now. Get the headlights refinished, etc. Do you have any beat up shoes or clothes? Go see a dentist - those guys always seem to be able to find cavities that need filling! Do you have 4 eyes? Go get an updated optometrist Rx, and far, near, and sunshade glasses (I go to a place that only charges $40 a pair, so I always get a full complement.) When I was getting ready to file Chapter 7, I managed to find about $5K in necessary expenses, without working up a sweat

As for prepaying things, you can only do so for 1 month in advance (or perhaps 1.5 months, as you had mentioned), so don't get cute there. And quit paying that stupid credit card! If you would get laid off after zeroing out your liquid assets, you would be in a prime position to get government help, like food stamps and Section 8 credits.

Also, make sure to keep all your receipts for what you bought (especially if bought with cash, which you should be doing now in any case), so that you could prove to the trustee that the cash you took out of the bank was spent, and not illegally squirreled away. And it would be a good idea to get a debit card, as you will not be able to use any existing credit card (and may not be for quite a while!)

Now, if you're in the situation in which you have a positive cash flow and would actually be saving money (i.e., after defaulting on your debt), then you may want to just file Chapter 7 even if you aren't quite able to figure out how to spend the $2500.

[jps1013]

When we filed, we had a lot more than $300 in the bank. We were able to keep 25% of what was in the primary checking account. We also had cash on hand and that went to the Trustee. Wish someone had told us to put it in the checking account.

[mikeinsurpri]

i'm in Arizona too, we are getting ready to file and have had to pay down our savings too. Like the others mentioned food, fuel and provisions for six months seems to be the norm. Remember you don't have to pay it down until you are getting ready to file. For example if you don't planning on filing until August or September then you have a few months to spend the money. Make sure you pay the lawyer so you can say you've "retain" a lawyer. This usually stops the bill collectors from calling, at least in my case it did. Are you planning on keeping the house? If not, I would think that the first and second would be eliminated in bankruptcy and you wouldn't have to worry about them coming after to you. This site has a lot of info on it that helped me throughout my process. There's also other websites that Arizona Lawyers have that explain the process as well. Good Luck, for us, the hard part was making the decision to file. Once decision was made we focused on it like it was all business. Just did what the lawyer said to do, produce all the documentation that they asked for and tried to keep emotion and feelings out of it.

[Exployer1234]

Wow AZ is a little harsh on the money that can be in the account. The day I filed BK I had 2600 in my account. Of course when I went to my 341 meeting I did not have that, because I had to pay my lawyer. My trustee ask where some of my money went, and I said car repairs and my lawyer. There is nothing left now.