When we stop paying our CCs.....

[Toby34]

Before we actually file, when it is recommended to stop paying the CCs, what should we do with the excess money we will have?

It would be about $1600 or so a month after we pay our car payment, car insurance, cable bill, cell phone bill.

[DeadManCrawling]

1600 is a LOT of excess, in terms of BK. I haven't seen your other posts that I recollect.

Are you trying for 7 or 13?

Either way, that is a LOT of dough in terms of BK.

Take a good solid look at everything you have sacrificed to this point, and use the money to "catch up". On medical, house and car maintenance, eyeglasses, anything that is completely legit that you may have foregone to pay the bastard debt purveyors.

In no case, EVER, do you want to save it. I know this feels counterproductive (and is, actually), but you MUST spend this on legit expenses.

We encountered the same situation. We have decent excess income, but nowhere near enough to make a dent in our debts, which are screaming ever higher at 33% across the board.

We are in the process of purchasing or already have:

new a/c unit to replace the traitorous one who hated us and jacked up our electric bill.

Back surgery, long put off to pay CC companies.

New bed for our son who outgrew his years ago.

Car repairs

House repairs, leaky roof, etc.

Dental work

The list can go on forever.

Take a close look at all you sacrificed so far, and fix it.

Spend this money as it comes in on legit expenses, or I am certain, the court trustee will spend it FOR you.

best wishes,

-dmc

[Toby34]

Well that is what i thought. But that is what we have.

Our household income falls below the median for hte state of Maryland. My wife brings home $2400/month after taxes. I'm self-employed and not bringing home too much lately, acouple hundred a month. Still getting things rolling.

So we would be aiming for Chapter 7.

We have over $80K in CC debt and $15K in personal loan debt.
So when we stop paying that, yea, thats why we have that much left over.

We are living with my parents right now, so we do not have rent or mortgage.

We have a new car (bought last Nov for my wife to drive) so we have no repairs for that. I read that we shoudln't spend anything over $600. Really my jeep (93 cherokee), runs ok...it coudl use some engine work, but it's unknown what that would run. Also I read that, car repairs was not a necessity item. I'm sure it would be more then $600 for engine work.

We have been going to doctors and dentists so thats not needed. We have health insurance.

I'm self-employed, I have some bills I could pay...about $2000 in total. I could space them out over some time... $200 here, $200 there.
I owe my parents $2000.

Sure i could use some new tennis shoes. My wife could possibly use acouple things.

I guess they wouldn't look highly on taking that $1600 and going out and renting a place and leaving my parents house.

Will we need to provide receipts for every penny when the 90 days starts? Or could we "misplace" a bit of it? ;)

[danaf]

I'm new here so one of the mods or others with more experience can chime in. But I think if you have that much left over every month you may be forced into a ch 13.

So yeah, it would probably be advantageous to rent your own place.

[lrprn]

Toby, have you actually completed the Means Test yet to ensure that you do qualify for a Ch 7? It looks like you have a lot of disposable income (likely because you both are living with your parents rather than renting or owing a house). I'm concerned you could get pushed into a Ch 13 even being below the median for your state.

I read that we shoudln't spend anything over $600.

You can't pay an UNSECURED creditor more than $600 total in the 90 days before filing. That's considered a preferential payment and the trustee will go get that money back. But you can spend more than $600 on legitimate living expenses, including car repairs. Just try to do it before the 90-day pre-filing mark if you can.

I'm self-employed, I have some bills I could pay...about $2000 in total. I could space them out over some time... $200 here, $200 there.

If these are unsecured creditors, why would you want to throw your money away by paying them? What you owe them will be discharged in the bankruptcy.

I owe my parents $2000.

Paying your parents that amount is most definitely a preferential insider payment and your trustee will ask them to return the money.

I guess they wouldn't look highly on taking that $1600 and going out and renting a place and leaving my parents house.

Actually that may just what you need to do. You need to draw down your disposable income or you could find yourself pushed into a Ch 13, even being below the median. You need a good bk lawyer's advice about this and your other questions - have you met with any yet?

Will we need to provide receipts for every penny when the 90 days starts? Or could we "misplace" a bit of it? ;)

Depends on how closely your lawyer feels the trustee is going to look at your case. Keep in mind that if you are caught hiding assets, including cash, your case can be dismissed plus you will be in a lot more trouble than you are now.

You haven't given us a lot of details about your case, but I'm wondering if filing bankruptcy is really the best option in your situation? From what you shared, it seems like you haven't had to do without a great deal as yet - your cars are in good condition, you've kept up with medical visits, you don't need clothes, house is in good repair, etc. With so much disposable monthly income if your unsecured debts could be reduced, have you considered trying to work with your creditors to negotiate down what you owe rather than filing?

[howdidithappen]

CC Payments

You say you can't pay more than $600 in three months to any credit card. So if the minimum payments are way up there $500+ you simply stop paying them? Guess that's why Chase came after me after I didn't pay them for three months. What is the time frame for filing, seeing an attorney, get "set-up" for all this? I appreciate everyone's help. It's a very stressful and confusing time!

[reallynervous]

Toby,

I agree that finding your place to rent now may be a good idea. The median income portion of the Means test basically says that you qualify to apply for a CH7 without the presumption of abuse of the BK laws. However, whether or not you can actually file a CH7 will depend upon a comparison of your monthly income to your monthly expenses. If you have over $100 of income left after you have paid your expenses, you may be required to file a Ch 13 instead.

We are close to the median income and may have an issue with our income vs expenses as we have no car payments, etc..

If you were to set yourself up in place to rent, then you could claim your rent, utilities, etc..

I agree that if you have $1600 leftover each month, you will have hard time filing a Ch7 without having living expenses from having your own place.

Also, be sure you are considering all your monthly expenses... life insurance, health insurance, medical co-pays, car inspections/licensing, food, toiletries, clothing allowance (our trustee apparently allows $50 per month per person), etc.. For annual expenses, you can take the annual cost and prorate it for a monthly expense.

You can go see an attorney anytime for initial consults. These are usually free. Try to set up several and see what they have to advise you about your situation.

Good luck!
reallynervous

[Toby34]

The only reason we would have that much disposable income is because we don't pay rent or other utlitiles except for Cell, Cable, and Phone.
No I did not include misc monthly expenses like co pays and food, clothing ect.

Health Insurance is included. We dont' have life insurance. We don't need car inspections yearly, only when getting tags.

We plan on talking to attorneys in acouple weeks, once my wife is done with teaching for the year.

So.....you guys may think that we should rent a place for $1000/month. Stop paying our CC's and then 3-4 months later file for BK.

The rate we are going, paying off the CC's we will never be able to get out of my parents house. We are 30 and we are want to move on with our lives and start a familiy. We haven't used our CC's for over a year, since they are maxed out and have been doing nothing but paying minimums and we dont pay all of them everymonth becuase our minimums add up to almost $5500 including car payments/insurance. Yet, we only have about $2500/month to work with.

We are $95K in debt.

[Toby34]

You haven't given us a lot of details about your case, but I'm wondering if filing bankruptcy is really the best option in your situation? From what you shared, it seems like you haven't had to do without a great deal as yet - your cars are in good condition, you've kept up with medical visits, you don't need clothes, house is in good repair, etc. With so much disposable monthly income if your unsecured debts could be reduced, have you considered trying to work with your creditors to negotiate down what you owe rather than filing?

I have another thread with more details.
$95K in debt. $80K in CC's , $15K in personal loans
My wife is a teacher and brings home $2400/month
I am self employed right now only bringing home a few hundred a month
We only pay Cable, Cell, House Phone, 1 car payment, and car insurance, plus Health insurance.
-----------------Minimums Balance
Kohls------------ 182------1270
Lane Bryant-------110-------640
First Common------180------6595
Best Buy----------230------3349
HSBC-------------293------2952
Sears-------------2132-----5221
Old Navy-----------17-------356
Capitol One------Collections---6603
Kays---------------75--------831
Chase-------------248------13386
BOA---------------100------5561
MBNA J------------700------39548
MBNA S------------76-------1730
Bank Loan----------305------8709
Totals - - - - - 4941------96751

Car Loan-----------360------16701
Insurance----------220
Tmobile------------127
Monthly Payments--5648


We also have Students Loans, her parents pay hers, but she is suppose to start paying them and mine are on.... I forget what it's called, they are on hold until I can afford to pay them.

[keepmine]

With student loans and a car loan plus, the costs of running a household a bk will do you no good unless, you can boost your income dramtically. You'll find the actual filig of the bk is the easy part. In 90 to 120 days it's over with the stroke of a pin. The hred part is fixing what got you there. In your case, a combo of overspending and low income. Unless the selfemployment thing takes off in a hurry, you need to start looking for work in a hurry.

[Toby34]

Ok, well a few have suggested that my wife and I go out and rent a place once we stop paying our CCs.

If we do that, should we wait acouple months a few extra months before we file, so that it doesn't look like we did it for filing reasons (ch7 vs ch13)?

Believe me....if this won't cause any problems, we'll move next week!! That is our dream right now is to move out of my parents house and start over.

Could we stop paying the CC's now...wait 2-3 months, get some repairs taken care of on my car, buy some necessities, pay my parents off.....then go rent a place.....then live there for 6 months...and THEN file BK???

[jal1129]

I agree with keepmine. If your income is a little over $2400 per month and you are looking at renting a place for $1000 per month and just your car and cell phones are running $700, plus you have student loans etc., you are going to be in deep trouble by about the second month. You need to get more income coming in.