When can I start 'buying' things again?

[JJDog]

I have need for tools that will be on the BR list, and as I need new ones anyway, like a drill, when will I be able to purchase these again? I still have need of stuff that I may have to give up. This is really sucking, and I haven't even filed yet.- I mean, even if I pay cash, its an instant 'asset' isnt it?

[dina13]

What state are you in? Did you check bk exemptions for your state to cover household goods, tools, etc.? Hopefully, drill,etc. is not something you'll have to give up if you check your exemptions.

[justbroke]

As stated above, you really need to look at your State's exemptions. Your state may have exemptions for Tool of the Trade, if these tools are used in a business or required for your to work. Yes, when you purchase something, a TV, a drill, a washing machine, they become personal property and have value. How you protect these, in bankruptcy, is to use exemptions. Depending on the State in which you live, you may enjoy some really nice exemptions (like California's System 2 with over $21K in exemptions.... if you're not using it on a home) or not (like Florida's measly $1K unless you don't have a home and you get $4K more).

[keepsmiling]

Wow JJ, looks like you will be in good shape if you use Colorado exemptions- up to 20K tools of the trade. (!)
If you wind up with Federal, pretty sure you get something there too, tho nowhere near as much.

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

[JJDog]

Hmm, well then can I sell the items (as Im on disability) and put the money 'back' in? Yes, Colorado. Also, I am pursuing a business that requires tools, but will I need a business license to prove this? Tools of trade when your disabled may not go, even though I am trying to do stuff to make some extra $. This is why I don't want to file just yet.

[bcohen]

Think outside the box here. Standard household tools depreciate rapidly, and are very difficult to sell for much more than a fraction of their original retail price, once used. Buy the tools you need, pay cash so there's no paper trail, and when you file for BK, just list "household tools $50" and I guarantee the trustee won't bat an eye. Most likely, that's all you'd get for your collection of tools at a yard sale, anyways.

[justbroke]

bcohen, it doesn't read as though these are "household" tools, but actually tradesman tools. I would also not list an arbitrary number. The number should be founded in some fact. So, if they are indeed household tools, the value would need to be determined and that number used on Schedule B (Personal Property).

If they are actually tools of the trade used in a business, then use the appropriate exemptions on Schedule C for them. Colorado is extremely generous for tools of the trade. If they are in fact household tools, then use an exemption which covers personal property.

I can't suggest re-categorizing something so that you can use a different pricing basis. To me, it's either a household tool or a tool of the trade. With bankruptcy, I think inside the box (Title XI).

JJDog, why not just get a few free consultations and ask for what is appropriate in Colorado? The attorneys there will know more about what will pass the sniff test with Trustees in your specific District.

[btbeme]

You are allowed to live with some sense of dignity - including making reasonable purchases for reasonable purposes - before, during, and after a bankruptcy.

If you can show a need for the item(s) purchased, on the small chance you would be asked, you should be able to explain the rationale behind buying a drill, or a set of tires, or a Costco-sized package of toilet paper, or a 50lb bag of rice (rice stores well in a freezer). Unless that is $300 drill with GPS and a money printer, a set of tires attached to a Mercedes Benz, a package of TP that came with a case of Johnny Walker Black, and a bag of rice that included a "free week's stay" at Hedonism II in Jamaica, I would not worry if I could explain and/or exempt it with a straight face and an honest heart.

See the difference? Assets you buy can be necessary or unnecessary (a judgement call - and the Trustee's judgement holds a lot of water, so lean toward the worst-case scenario here). They can also become recoverable. Very, very few Trustees want your basic Makita drill that is used to install TV mounts on walls as part of your job, or a set of tires that made your vehicle safe to drive - and certainly not your TP. But, as outlined above, having an exemption for something useful and necessary pretty much removes all doubt and risk.

Mostly because your stuff ain't worth much anyway. Harsh but true. Nonetheless, you have to list it and explain why it was necessary if asked. Which happens...just not often. Unless you give the Trustee reason to dig deeper with hints that, collectively, do not pass the smell test, as Justbroke states above.

[justbroke]

At least JJDog is in Colorado. Florida has only one exemption category and that's the Wildcard.