Am I worrying to much?

[mrloaf]

I filed on sept 28, my wife had been out of work for about a year. We easily made the medium and means test for a family of 4 to file a chapter 7. My wife had applied for social security and was finnaly granted it 4 days after our filing date. Within a week we also got a chunk of money in backpay from social security.

Our lawyer said this was exempt and we were fine to spend it on exempt purchases so she bought stuff for the house and some new clothes and some furniture. She spent a couple thousand and the lawyer said this was fine we got the money after filing and it was exempt.

Now 3 weeks later the lawyer calls and sais we shouldn't be spending the money from social security they are worried the trustee is going to question our spending and if we will be able to get a chapter 7. The lawyer stated we damn well better have reciepts for everything weve bought, wich we have, for almost everything, maybe a pop or something small like that missing a reciept.

After arguing with him that he originally said it was fine then he states that we should be ok as long as we dont spend anything else out of our checking account untill our 341. This leaves us a family of 4 with almost 2 weeks to live without any money, when we have money in our checking account from social security that is supposed to be exempt.

Any coments on this would be greatly appreciated, I'm stressed to the max as it is with filing bankruptcy now the lawyer throws this on top of it making me think the trustee is going to chew us up.

[LadyInTheRed]

So, it sounds like the social security benefits were paid after you filed, right? Was the amount due to you/your wife listed as an asset on Schedule B and exempted on Schedule C of your petition?

[mrloaf]

Social Security was not even approved untill after we filed, so yes the benefits were also recieved after filing. Nothing was claimed as far as benefits on our filing paperwork becouse we had been told by social security and our bankruptcy lawyer that we probably wouldnt be approved for a long time, that most people have to appeal their case a few times before they are approved and recieve benefits. At this point all we have received is back pay and the monthly social wont start coming in for another month.

[LadyInTheRed]

I suggest you ask your attorney to file an amendment to your petition to include the benefits as an asset and exempt them. Your claim to past benefits existed on your filing date and therefore should be listed as an asset.

If for some reason your attorney refuses to file an amendment, when the trustee asks at your 341 if everything on your petition is correct, I'd mention the SS benefits. Tell your attorney that is what you plan to do so he is not surprised. The trustee will probably then tell your attorney to file an amendment.

The fact that you spent the money after you filed your petition should not be a problem as long as there is no suspicion that you were trying to hide the asset. But, I don't want to contridict the advice of your attorney. It would be best not to spend that money. Your attorney's concern seems odd, but it's possible there are some missing facts here.

[mrloaf]

UPDATE! Now the lawyer said everything is fine he is just being extra carefull so that that we have everything the trustee needs at the 341 and that it wont be continued. He sais we can buy everyday items (food, gas, etc..) just buy it with my money earned from work not the ss backpay, they both come out of my checking account though. Stress is killing me I wish my 341 was today so I could get it over with.

[btbeme]

I'll toss a couple of thoughts out there for you to consider...

1. Sounds like you are being honest. That is a very good policy when dealing with a Trustee. As Lady says, getting in front of this via amendments would be helpful, but do expect a conversation w/ the Trustee at your 341. Your attorney can help handle that.

2. Hiring an attorney is like buying a fire extinguisher. You don't really need one if everything goes right, but it sure is nice to have one ready to go if it starts to get hot. Sounds like your attorney is competent - just make sure that you confer with him and get the your ducks in a row for fixing this.

[AngelinaCatHub]

I'll toss a couple of thoughts out there for you to consider...

1. Sounds like you are being honest. That is a very good policy when dealing with a Trustee. As Lady says, getting in front of this via amendments would be helpful, but do expect a conversation w/ the Trustee at your 341. Your attorney can help handle that.

2. Hiring an attorney is like buying a fire extinguisher. You don't really need one if everything goes right, but it sure is nice to have one ready to go if it starts to get hot. Sounds like your attorney is competent - just make sure that you confer with him and get the your ducks in a row for fixing this.

I agree with most of what you said, and also Lady. The back pay of SS is exempt as it was declared not paid on time and the OP was entitled to it. The competence of the lawyer is my question. He contradicted himself telling the OP to go for spending it, then he had doubts?? Not good. Not competent at all. In fact it could become his fault if the 7 fails or the Trustee chews up our OP. That lawyer better be there without a stand in so many lawyers do.

He also caused unnecessary stress for his clients. 'Hub

[Kev1235]

I agree with most of what you said, and also Lady. The back pay of SS is exempt as it was declared not paid on time and the OP was entitled to it. The competence of the lawyer is my question. He contradicted himself telling the OP to go for spending it, then he had doubts?? Not good. Not competent at all. In fact it could become his fault if the 7 fails or the Trustee chews up our OP. That lawyer better be there without a stand in so many lawyers do.

He also caused unnecessary stress for his clients. 'Hub

Agree 100%. I question his knowledge of bankruptcy procedure and his trust in his own competency after you're paying him to handle your case and it's demands. Nothing you can do since you already paid him but not someone I would reccommend.

I would do as said above and just be up front. Not much more you can do. I don't think you have a ton to worry about since it was not planned.

IMO and I am not a lawyer but filed pro se. I would spend what you need to survive. If you file bankruptcy and receive money or get a job afterwards you're not supposed to let it rot while you wither away and become homeless. As long as it's an amount that is accountable, not overly large, and you still pass the means test I wouldn't sweat it alot. And I would rather walk in there and say I spent it on things I needed, than to walk in there with thousands of dollars sitting in my checking account. But just me.

Guess your lawyer thinks the thousands of dollars in your checking account at your 341 is a good thing.. The trustee makes money by finding money to take from you.

[mrloaf]

Thanks for the comments, I wish I could say they put me at ease, but I'm still having trouble sleeping and eating worring about it. As far as the compentancy of my lawyer, I dont know what to say, we deal alot with his assistants and I wonder if things are getting conveyed properly between all of us. As far as him coming to the 341 we wont find out if he will come or one of "his buddies" that stands in for him, as he put it. The comment about the means test passing or not with the extra income, I was under the understanding that ss couldnt be used to determine income?

[mountanddo]

I agree with most of what you said, and also Lady. The back pay of SS is exempt as it was declared not paid on time and the OP was entitled to it. The competence of the lawyer is my question. He contradicted himself telling the OP to go for spending it, then he had doubts?? Not good. Not competent at all. In fact it could become his fault if the 7 fails or the Trustee chews up our OP. That lawyer better be there without a stand in so many lawyers do.

He also caused unnecessary stress for his clients. 'Hub

I certainly agree with this! Which is why I asked in another thead what recourse you have if your attorney gives you bad advice. It's a good thing you have receipts for those purchases because it doesn't sound like he advised you to keep them when he originally told you you could spend the money. Hope everything goes well!

[mrloaf]

Whats the worst case scenario that could happen here? Could my case be dismissed? Could the trustee take the backpay(part of which is spent)? The lawyer sais I'm worrying to much, and that I payed him to worry for me. How often are cases dismissed?

[mrloaf]

UPDATE! Today was the 341, went pretty smooth I guess. Not a whole lot was said about the ssdi, she was more interested in getting pics of a couple guns I own. Hopefully it's just a waiting game from here on.