Right before you file

[Jessika1012]

Hello,

I know this may sound like a weird question, but we have been kind of waiting to pay some small amounts back on our cards before we file and now we have stopped making payments because we can no longer afford it. What should we be doing for the next month or two with our expenses (we want to wait a little longer)?? Save for the lawyer is a given, but is it good to have a month worth of expenses and so forth? I read in another thread to make sure that you have what you need before you file. We definitely have some much needed things to take care of such as car repairs. Is this a good idea to be doing this? What if we are looking into more life insurance? Does this look bad to do this? We have been looking at this for a while because we don't have any, but it just happened to fall in a time like this.

Is it also smarter to just stop contributing to 401k before you file? We were both doing 6% up until we found out on here that you have to pay that back? and also add this in as income? I have never got a clear answer on this one. There are so many different ideas of what to do and not to do out there.

[SinkingFast]

The 401K Contributions are a confusing thing for sure.

We met with our attny on March 30. Hubby was eligible to start contributing to his 401K plan April 1. We specifically asked the attny about that and he said it was fine. To go ahead and do it.

Many, many others here have posted that they had to quit making contributions or couldn't join their company plans while they were in BK.

Maybe our attny told us wrong??!! I sure hope not. It's not a huge amount anyway. 2-3%. And that's before taxes. Makes very little difference in the Net.

Definitely save up for your attny's fee. They won't file until they get paid whatever. In full for a 7 or the partial payment for a 13. Plus you gotta have your filing fees as well. $274 or $299 either way.

Take care of any necessary things. Car repairs, doctors visits, dental appointments, clothes. That kind of thing. You can stock up a bit on groceries in the pantry and freezer if you have the extra cash. Start using Money Orders and Cashier's Checks to pay bills. Use your Debit Card at the grocery and gas station. Money is instantly gone. Not sitting in your bank acct that way. Any extra money, buy Money Orders or use the envelope system and set money aside for your monthly budget expenses for bills that will come due. Auto insurance premiums, etc. At Wal-Mart, the MO's are good for a year and cost less than 40 cents each.

I don't know about going out and taking on a huge life insurance policy all of the sudden. We carry a life insurance policy, but it's been in place for years. The Court likes to see continuity. The same things happening all the time. If you give to your Church, keep giving the same amount. If you were to all of the sudden take out a huge life insurance policy, that might send up a red flag with the Court. Maybe go with a moderate, no cash value policy, and pay for a year's coverage in full, up front.

[glc4122]

second mortgage

yes, im new to this site and never posted. i would appreciate any information about a second mortgage that im thinking about acquiring. If i acquire this loan can the company get a judgement deficiency against me if i default. and can this this judgement defiency be discharged if chapter 7 is filed.

[13inOR]

I think more info is needed. Are you planning to file?

[SinkingFast]

yes, im new to this site and never posted. i would appreciate any information about a second mortgage that im thinking about acquiring. If i acquire this loan can the company get a judgement deficiency against me if i default. and can this this judgement defiency be discharged if chapter 7 is filed.

If you're tight on money now and have significant equity in your home a 2nd could help. But, I wouldn't go more than 85%-90% of the value based on working with a reputable lender using a reputable appraisal. That way if you need to sell, you still have some wiggle room for costs to sell.

You can't just say you want to file Ch 7 under the New Law and get it. You have to qualify for it.

And if you're thinking of taking a 2nd to pay off CC debt and then dump the house in BK, you're gonna pay, big time. If you file BK and give up the house in the process, you're gonna be dealt a double whammy on your Credit. No way around it. You'll have both a Foreclosure or Deed in Lieu and a BK on your Credit History.

[glc4122]

thank you for the response, i still don't quite understand the Deed in Lieu. I have never filed bk and looking for a way to pay off credit cards.If i would go ahead with the second mortgage,and if hard times are down the road will this mortgage be dismissed in bk and can i walk away.

thank you
glc4122

[Jessika1012]

yes

I think more info is needed. Are you planning to file?

Yes, we are wanting to hopefully file soon. Any advice from my original posting on this thread is greatly appreciated!!! Thanks.

[glc4122]

thank you for the reply and more replies would be appreciated on the many questions about bk from everyone.

glc4122

[aa06a47]

glc4122, if your planning on filing, do you have the credit in order to obtain a second mortgage at a reasonable rate. I assume that your credit is shot already? Maybe not.

Are you over the medium? How much equity do you have in your home right now. If you file, would the equity in the home be exempt in your current state. There are alot of question you need to look at. If your equity is covered by an exemption, I see no reason to take a second.

Since I believe you are doing pre-bk planning, I would say 1) Under no circumstances should you borrow more money than you need to in order to cover the exemption. Give us some more information.

[SinkingFast]

Taking on new debt on the eve of filing BK would most definitely look very suspicious to the Court.

If you do a refi, and several years down the road, you wind up filing BK that's one thing. But to do a refi, and then file BK within 2 years or less, that's gonna get some serious scrutiny by the Court. The look back period on major financial moves, purchases, property transfers and such is 2 years.

You won't be asked a question about it. You won't have to declare it in any way. You'll have to provide copies of your original mortgage and the 2nd to your attny and the Court. The date of the loan will tell on you to the Court. So, yes, you could potentially take on a 2nd mortgage to pay CC debt that might not be discharged in BK.

[glc4122]

yes, my situation is my house is worth approx. $120,000.00 and owe approx $84000.00 and have approx. $35,000.00 in equity. i contacted a company for a second mortgage of $70,000.00 and was in process being approved. the money would be used to pay cc debt.I have a daughter in college and would like to keep my credit good to co-sign for education purposes, so she can graduate in two yrs. i live in ohio and the exemption is $5000.00 for single and $10,000 for joint. i have a decent job and my wife works also we make approx $50,000.00. we have four dependents include my self and wife.Im really unsure what to do , all the help would be appreciated.

glc4122