What not to do after filing and before 341

[DesdemonaB]

Hi Gin

Have you concerned that debts are not forgiven till you received that convented letter that starts with those magic words.. It appearing that the debtor is entitled to a discharge...

A lot can happen between that filing date and discharge date, trustee from hell, creditor who feels they need to prove a point, AP, job lost, accident, act of God you name it.

Because your BK will be non-consumer it would be a safe bet to say that it's a larger debt amount then a consumer debt and because it may involve business and investment debt you may have more creditors interested in your case - a larger magnifier glass then most of us. Spending after filing puts that magnifing glass right down on top you, it might not be your trustee looking but you run the risk of your creditors filing complaints and as Ricky always said... then "you'll have lotta splainin' to do"



And if you are itchin' to spend some money, donate it to the America Red Cross they need the money more then you need that TV or vacation. Besides it's good for the soul

[GIn]

Either way, it may end up if you are showing $1K DMI..then you may be a Ch. 13 case regardless if you are under median or not. Schedules come into play.

Not correct. Non-consumer. Means test doesn't apply, neither do schedules. Not eligible for a 13 - too much unsecured debt. How to avoid BK in the future? In my case, never sign a personal guarantee on a business debt. It has nothing to do with my own personal finances or spending. I have no reason to file, other than judgments and lawsuits as a result of personal guarantees on business debt.

[Pandora]

I didnt see it was non-consumer.. sorry 'bout that.

[GIn]

Hi Gin

Spending after filing puts that magnifing glass right down on top you, it might not be your trustee looking but you run the risk of your creditors filing complaints and as Ricky always said... then "you'll have lotta splainin' to do"

Seriously? How are the creditors going to know that I purchased airline tickets or a $1,000 television after I filed. And even if they did find out, so what? I HAVEN'T DONE ANYTHING WRONG have I? My "splanin" is that I spent my own money. It is my understanding that the BK is a snapshot on THAT day. What I do after should be my own business. Does anyone have any specific actual examples of someone's spending AFTER the filing that caused problems before they were discharged?

[mlsj2009]

I'm filing non-consumer Ch 7 in a few months. I have disposable income. I have no assets currently that aren't exempt. The day after I file, is that the last I need to worry about watching what I spend my money on? I mean, can I go out and blow my paycheck on a $1,000 television or take a trip before my 341? Is there anything I could do after I filed but before the 341 or before the discharge that would violate any of the bankruptcy codes? I definitely don't want to get myself in trouble. I'm just so ready to get all of this over with and move on. And, I am very sorry to be asking this question when so many of you are seriously struggling financially. I don't know how else to ask it without seeming crass.

Interesting thread, and I appreciate everyone's contribution because it helps me understand more about BK and a lot about communications. I think what has caused some misunderstandings in GIN's question is her use of "disposable income". I see many of you thought that to mean "disposable monthly income." These two are not one in the same but it could indicate such. DI can be a one time amount that in this case, may be protected by asset exemption. What I take GIN wanted to know was if she had a one time exempt amount she listed on the schedule, can she spend it on whatever she wants once she has filed without fear of the trustee questioning it at the 341 meeting? The answer to that question is she should be able to.
Any speculation about whether GIN will be responsible in the future with her spending is just that. Her question was a simple logistic question involving exempt property, or at least that is the way I see it. Again, thanks for all your replies. Very interesting.

[GIn]

What I take GIN wanted to know was if she had a one time exempt amount she listed on the schedule, can she spend it on whatever she wants once she has filed without fear of the trustee questioning it at the 341 meeting? The answer to that question is she should be able to.

Thank you mlsj. I actually meant it the other way. I will show disposable income on the schedules. Someone jumped all over me early on which is why I was trying to make it clear that I wasn't hiding the fact that I have disposable income. That fact will be listed on the schedules. It would normally go into savings but I can't have a savings account so I've had to spend it on other things that don't result in assets. So my question was after I file, can I spend my money on whatever I want, even frivolous and luxury items, without concern about questions at the 341 or heaven forbid doing something that would prevent my discharge?

Her question was a simple logistic question involving exempt property, or at least that is the way I see it.

Yes! That is exactly what I intended. Except not with exempt property, with money I earn AFTER I file.

[mlsj2009]

Thank you mlsj. I actually meant it the other way. I will show disposable income on the schedules. Someone jumped all over me early on which is why I was trying to make it clear that I wasn't hiding the fact that I have disposable income. That fact will be listed on the schedules. It would normally go into savings but I can't have a savings account so I've had to spend it on other things that don't result in assets. So my question was after I file, can I spend my money on whatever I want, even frivolous and luxury items, without concern about questions at the 341 or heaven forbid doing something that would prevent my discharge?



Yes! That is exactly what I intended. Except not with exempt property, with money I earn AFTER I file.

If that is the case, GIN, and you have DMI, most likely, the trustee will pick up on this and recommend you for a Chapter 13. So, I agree with the rest, I wouldn't be openly spending the excess in case they construe it to mean the oversight was somehow fraudulent, even though you listed it. It is often better to give no appearance of evil even though you haven't done anything evil.
BTW, if this is new money that has been added because of a new job, an additional job, or another source of income, you must report the new income to the trustee. If that is the case, the new change may raise the question to the trustee as to whether you belong in a Chapter 7 or a Chapter 13.

[GIn]

If that is the case, GIN, and you have DMI, most likely, the trustee will pick up on this and recommend you for a Chapter 13.

I am non-consumer. I am allowed DMI. I do not qualify for a Chapter 13 because my unsecured debt is too high.

[mlsj2009]

I am non-consumer. I am allowed DMI. I do not qualify for a Chapter 13 because my unsecured debt is too high.

I am sorry, GIN. You are right, I forgot when I answered you that you are filing a non-consumer Chapter 7. Sorry. In that case, I still can't help you. You need to consult with a BK lawyer as to your original question. Sorry I can't help you.

[Kev1235]

Sounds like you know the answer you want. Why ask for people to tell you otherwise if you only really care about what you want to do and not about what's safe or the good idea? LOL I mean seriously. A trustee gets paid to find money/assets from you and take them. Literally. That is why most are saying to play it safe.

Seems like a waste of peoples time to ask for answers you don't want. Just go buy the friggin big screen tv, show up at your 341 with a nice tan.

[DesdemonaB]

[QUOTE=GIn;540031]Seriously? How are the creditors going to know that I purchased airline tickets or a $1,000 television after I filed. And even if they did find out, so what? I HAVEN'T DONE ANYTHING WRONG have I? My "splanin" is that I spent my own money. It is my understanding that the BK is a snapshot on THAT day. What I do after should be my own business. Does anyone have any specific actual examples of someone's spending AFTER the filing that caused problems before they were discharged?[/QUOTE]

NY Post 8.17.2010
Spendaholic "Real Housewives of New Jersey" star Teresa Giudice celebrated her bankruptcy in style -- with a $60,000 shopping spree, astonishing court testimony revealed yesterday.

The buying bender came to light as the Bravo star and her husband, Joe, who owe creditors $11 million, tried to convince a Newark federal bankruptcy judge to stop the planned Aug. 22 auction of the contents of their Towaco McMansion.

In court, even the Giudices' own lawyer, James Kridel -- who had filed a court document with receipts that detailed the spree -- seemed at a loss to explain the profligate spending to Judge Morris Stern. Kridel said he knew the documents presented "a dilemma" and that Stern might view it as "conspicuous consumption."

The receipts show that within days of filing to wipe out their multimillion-dollar debt, the Giudices blew $8,800 for curtains and nearly $45,000 on wall hangings, mirrors, frames, tables, urns and chairs, The Post's Jeane MacIntosh reports.

"These were not Ikea-purchased furniture items," Stern said. "These were from high-end design stores."

The judge refused to stop the auction, but postponed it until Oct. 3. Stern called the Giudices' high-spending ways "a lifestyle choice" but noted that "it's not for this court to tell people how to spend their money."

During the hearing, bankruptcy trustee John Sywilok noted that right before their bankruptcy filing, the Giudices racked up an earlier $21,000 worth of furniture buys -- and paid off a total of $11,000 of that just two days before declaring they were broke.

After court, Teresa declined to comment on her shopping spree.

Hubby Joe -- sweating profusely and barely able to contain his temper with media after the hearing -- snapped, "None of your business! Back off before I get pissed!"



While 1,000 is not 60,000 the bottom line is it came to the attention of the court and it had to be addressed. While this case is completely jacked and still hasn't discharged and they are going on 24 months now. It should be the poster child of what NOT to do in a BK.

Whatever you want to do with your money will still be there 90 days after you file, in fact you will have even more so you can get a bigger TV or better vacation.

[LadyInTheRed]

Since August 2010, Terese Guidice has been charged with BK fraud. Not because she went on a shopping spree after filing, but because she allegedly hid assets and income. http://www.totalbankruptcy.com/bankr...800545142.aspx

GIn wants to spend his post-petition income. A BK petition is a snap shot of your finances on the date of filing. If you file a Chap 7, income earned after filing is not an asset of the estate and can be spent however you like. As the judge said in the posted article, "it's not for this court to tell people how to spend their money."

It could be that Terese Guidice's post-filing spending spree raised a red flag that caused the trustee to look further. But her pre-petition spending alone was probably enough to raise red flags. The fact that she is a TV star could also have caused the trustee to suspect the income she listed was too low. In addtion to being honest on your petition, it is a good idea to avoid unnecessary spending until discharge to avoid the possiblity of being put under the microscope and the hassel that it would cause even if the trustee didn't find anything. There is nothing that says you can't go spend $1,000 of post-petition income on a vacation or a flat screen TV. But, in a consumer Chap 7, it could cause the trustee to suspect you have disposible income to fund a Chap 13. Whether a similar issue exists in a non-consumer Chap 7 seems to be a source of disagreement among courts. So, it will depend on your district. I found an article that briefly discusses the status of the law regarding bad faith dismisals in non-consumer Chap 7 cases, but it's on site that the forum doesn't allow us to post links to. Google "non-consumer chapter 7 bankruptcy" without the quotes and you will find it.

So, I agree with the people who say be safe and hold off on any extravagent spending until you have been discharged. I consider spending $1,000 on a TV extravagent. But, if you just must have it, ask your attorney first.

[sassiebaz]

I'm not so concerned about what we are spending our money on between the day we filed and our 341 meeting, but I DO have a concern regarding our income. Two months before we filed my hubby got a new job...straight commission and he is doing very well. Could be a fluke. But, is there anyway the court wont give us a discharge based on his new income? MY attorney says it would be the first time for him if that were to happen and he thinks likely it won't. But, I'm still a little nervous! Based on 6 months prior to filing and our last two years tax returns we are well qualified for a chapter 7. Any thoughts???

[jst4f]

I don't believe DMI is involved in a non-consumer BK7. Fraud is not an option and that doesn't sound like it is an issue he. What we are saying is you don't want to create the perception of fraud. Given all the tricks others have tried over the decades, the Trustee must be suspicious of any indication of fraud and take the time to chase it to ground. The key word is time. They can drag it out for as long as they feel is necessary and the sooner you get out of BK the better. I understand it is your money but a little frugality between filing and discharge would be wise.

[btbeme]

How is spending my own money from my own paycheck after filing BK fraud? If my schedules show disposable income, how is spending my own money an appearance of guilt? What is 60 days timeline are you referring to? The 341 meeting is six weeks after I file and the discharge is about four months after.

Frogger: "Personally however, I would not choose to do anything to get myself noticed." How would this get me noticed? How will the Trustee know what I do with my money after I file?

Do you understand that when you file Ch 7 that you are no longer the "owner" of your property? That the Trustee opens an estate that consists of everything you own? That they are in absolute control of everything you own, including "your" paycheck? Until you are discharged, the Trustee has you by the privates?

The simple fact is that there isn't anyone in the US more powerful than a Bankruptcy Trustee, except for a Bankruptcy Judge. Bankruptcy court exists in the Federal Court system. Believe me, there are PLENTY of people out there who thought they were smarter, more sly, or had a better grasp of the rules than their Trustee.

If you would like, I suggest that you do whatever strikes your fancy after you file. See how much you can "get away with" and let us know. Once you put one over on the local Ch 7 Trustee, try your skills on the Federal Trustee. Let's see who has the higher tolerance level - yours for pain, or the Trustee's for fun.

I personally know a long-term federal judge. He will likely become a circuit court judge in the near future. He says that the only people he would never, even consider crossing is a BK judge.

Many posts here are correct. All it takes is for something to not look, feel, or smell right for a Trustee to open up a big can of hurt, of the Federal brand. Ask many people here what that feels like.

Fraud is whatever the Trustee says it is. Roll the dice. Or don't.