Current with Creditors, should I wait to file?

[woeisme]

Hi there. I have my first meeting with an attorney tomorrow to discuss CH 13 BK. Right now I am current with all my creditors (but have to continually use credit cards to pay everyday bills b/c paying my minimums leaves me broke for the month). Should I keep making my min payments until the paperwork is ready to be filed, or stop paying them so I won't be using any more credit before I file? I know any big charges before filing (over $500 for luxury goods or services) is considered abuse, but what about small day to day expenses that I can't cover because I'm already giving the CC companies all my $ every month? I've never been behind on my bills in my life, but now have over 66K in debt and can't dig out with the monsterous interest rates they charge. Any advice? Thanks in advance.

[BKTango]

If you know for a fact that you are going to be filing...then stop using the cards altogether and stop paying on them and start using that money for living expenses. If you cut out all of the cc's and other debts you plan to discharge and start living on a cash only basis you should be able to cover all expenses if not then you need to look farther into your budget and learn to live within your means, of course. Our attorney had told us this way, if you are filing and you know you are, why throw money at a debt that is going away when you get discharged? Use that money to live on.

I'm curious why a chapter 13? Depending on your income and the state you live in you may be able to file a chapter 7, that is unless you have certain assets you need to protect or are in arrears on secured items you plan to keep like a home or car. Unless there is some specific reason you need to first look into seeing if you can file a chapter 7.

[Nowwhatohio]

I thought it was if you spend over $600 on a tradeline 90 days before bankruptcy abuse is assumed - regardless if it's a single item and whether or not it's a luxury or not.

I also thought the 90 days was a guideline but a CC might go ahead and do an adversary proceeding even if it's 90+ days, when abuse isn't assumed but it could be shown to the court.

I am personally unsure if the $600 level can kick in if say you have three citibank accounts and spend $300 on each - I wonder if they can be lumped together and citibank can go after you?

[woeisme]

reply

I was thinking chapter 13 because between my husband and I, our gross income is about 30K over the median for Ohio, so I don't think I'll pass the means test for chapter 7. Of course that is why I'm going to see a lawyer tomorrow, but have pretty much resigned myself to chapter 13 since chapter 7 seems like a longshot. We have a lot of student loans (50K worth) so maybe that will be taken into consideration since we will have to keep paying on them regardless. We just bought the house 3 years ago and have very little equity in it (maybe 3K) and both our cars are paid off, but not worth much (a 10 year old truck with 140,000 miles on it and an 8 year old car with 115,000 miles on it) so chapter 7 would really be nice, but I can understand why the law was changed so that those that could afford to pay some towards their debts, just not all of it at the high interest rates, should have to go the chapter 13 route. We could definitely go total cash for all our needs if we weren't putting half our paychecks towards minimum payments on credit cards each month! So I'll ask my lawyer tomorrow, but I think you're right, I can stop paying on them and use the cash for our bills until we file, and have $ left over for the lawyer, lol. Thanks!

[Beach Bum]

The Means test factors you income vs. expenses. So you could be way over the median income limit, but if your house payment is like $4000 per month it will offset the extra income.
You could also buy a car before you file. Looks like you guys need one anyways.
It will increase your expenses and help you to pass the means test.