New here, nervous with bk timing questions

[jimisbroke]

Hi all,

Just made the big decision that after many years of denial I am headed for BK. I am meeting with a lawyer beginning of January but am hoping to get some expert advice re: timing before then. Here's my story:

Owe $35K on cc's. Due to a recent pay cut I can no longer make my cc minimum payments which are about $710 per month. Actually, at the end of the month I have about $25 after paying all other bills. I am under the median income by about $10k per year so should not have a problem filing chap 7. My problem is some charges that I made before my pay cut. Here's the timeline:

September: Sold $13k in private stock. Used all but $400 to pay off Amex.
October 15: Large purchase on paid off Amex ($6200). This was a luxury purchase - no question.
November 10: A/C unit dies - New one put on same AMEX ($3850). Pay cut goes into affect. Put car insurance and other assorted bills on same Amex. Amex balance back up to $17,500. Try to sell remaining stock to pay it off. Told by company that they are not allowing any sales at this time.
December: Realize we are in real trouble here. Try to stop using credit cards but used the Amex once last week for food.

So, we have officially stopped using our credit cards. I know we need to put a period of time between those charges and filing. Will it help us that we paid that credit card $12,500 in September? Will it at least show that we had no intention of filing (we really didn't). Finally, how long would you wait to file and would you pay the Amex if you had the means to until you filed? Not sure that we will but we will be getting our tax refund in 6-8 weeks so that will help...

[AngelinaCatHub]

You look fairly in good shape time wise. Don't use any cards at this time. The one time for food keep receipts (if you still have them) or your next statement. The Court will want six months of your bills, so once you get your lawyer, do your best to drag it out a few months if you can. Stop paying and using all CC's. You won't be sued for only three months delinquent.

I'd say, you are about an average C7 candidate and nothing looks to bad to me as per the info given.

Welcome to our Family. 'Hub

[jimisbroke]

Thanks for the reply and for the welcome! It helps to realize that there are others out there in the same boat.

[tobee43]

again let me extend a "welcome to the board" and our family!

with respect to paying off the 12k, unfortunately the only one that cared for the second was the creditor who rec'd it. it will not matter a bit,unless you file now, which may not sit well with the trustee, and you don't want the “Preferential Payment Rule,” to apply, which is not a good thing for you.

also, i would attempt if you can, to put as much distance between the last time you charged and when you file. i know that's somewhat difficult. however, the longer between the time you charged and the time you file it is better for you. when you do go in to your 341 meeting and what you do submit is an actual 6 month snap shot of your finances, so you want to make certain you didn't charge for quite some time.

the 90 day rule, sometimes is questioned by some trustees. i know in our area it is honors with respect to if you didn't charge within 90 days of your filing it's not questioned. but, the trustee still asked everyone in our "room" when is the last time you charged anything for the record.

intent is difficult to prove. but if i were in your position i wouldn't file on day 90th of the last time you charged.

best of luck to you!

[jimisbroke]

Thanks for the good advice. We will do our best to wait until June to file, thus putting 6 months between last charge and filing. Appreciate your taking the time to reply and also appreciate the welcome!

[tobee43]

Thanks for the good advice. We will do our best to wait until June to file, thus putting 6 months between last charge and filing. Appreciate your taking the time to reply and also appreciate the welcome!

any time!!

a bk is a journey, indeed! don't be scared or uneasy to post any questions you may have, or just if you need some support. there are plenty people here to help

[LadyInTheRed]

and you don't want the “Preferential Payment Rule,” to apply, which is not a good thing for you.

Actually, a preferential payment doesn't hurt the debtor, except for the fact that they threw away money paying off a dischargeable debt. The trustee gets the preferential payment back from the creditor who received it and it gets distributed among all creditors. It's the creditor who gets hurt in the BK case, not the debtor.

[AngelinaCatHub]

Actually, a preferential payment doesn't hurt the debtor, except for the fact that they threw away money paying off a dischargeable debt. The trustee gets the preferential payment back from the creditor who received it and it gets distributed among all creditors. It's the creditor who gets hurt in the BK case, not the debtor.

Yes but LIR, it could turn a simple no asset case into an asset case (as it did in our case among many other mistakes) and cause a 90 day discharge and a year to close as it did with us. So you see, indirectly, it could hurt our OP. 'Hub

[tobee43]

Actually, a preferential payment doesn't hurt the debtor, except for the fact that they threw away money paying off a dischargeable debt. The trustee gets the preferential payment back from the creditor who received it and it gets distributed among all creditors. It's the creditor who gets hurt in the BK case, not the debtor.

yes true, it actually hurts the debtor who should have kept that money!

i think my point, which i didn't elaborate on, was that can hold up your bk close while the trustee messes with getting back the payment and then the distribution to the other creditors, so they are really the only one's that benefit from that payment.

[tobee43]

LOL!!! hub i didn't see you there !!!

GMTA!

[Freddy03]

Question:


Quoted from OP - Jimisbroke:
"October 15: Large purchase on paid off Amex ($6200). This was a luxury purchase - no question."


Is this going to be an issue? FL has pretty low exemptions.

[tobee43]

Question:

"October 15: Large purchase on paid off Amex ($6200). This was a luxury purchase - no question."


Is this going to be an issue? FL has pretty low exemptions.

true! but i know that our trustee really wasn't interested on any charge over 90 days old. maybe we lucked out???

but 6200 is a large amount, but if the 90 rule applies, i mean what can they say since it was months before. i guess worse thing could be, the trustee sell that 6200 item?

[AngelinaCatHub]

Question:

"October 15: Large purchase on paid off Amex ($6200). This was a luxury purchase - no question."


Is this going to be an issue? FL has pretty low exemptions.

Yes Freddy this could be questioned. I'm not understanding the reason for your post. You are discharged. I doubt if it means you, the Trustee will bring it up again. It is too late for an AP for this item, but a Trustee could reopen a case if fraud is at all suspected. Keep a low profile if this occurred to you. LOL. 'Hub

[AngelinaCatHub]

HMMMMMM Freddy five days before your discharge? You are not allowed new debt without permission until you are done. I still say, don't sweat it. Just don't show it off to your friends. LOLOL. It will get by. 'Hub

[Freddy03]

Yes Freddy this could be questioned. I'm not understanding the reason for your post. You are discharged. I doubt if it means you, the Trustee will bring it up again. It is too late for an AP for this item, but a Trustee could reopen a case if fraud is at all suspected. Keep a low profile if this occurred to you. LOL. 'Hub

LOL No not for me. Shoot I didn't use my credit cards for almost 2 years before I filed...lol

I was just wondering for the OP sake. Because I was never asked by the trustee to see credit card statements but my attorney sure did reason being that if there was a purchase made he wanted to make sure the item was exempted and listed in my house inventory.