Wife is having a hard time wrapping her mind around BK (not paying cards)...

[Diesel73L]

Great discussion! This is exactly why I decided against filing pro se despite being someone who loves a "DIY" challenge. We will have no problems in terms of exemptions-the federal limits are way beyond what we need to protect our property, but I want to be doubly sure that we do not do anything improper prior to filing in terms of making sure that what little cash we have is exempt.

Totally agree with you Hub but when is too much too much? 3 months of prepaid daycare? Why not just pay for 5 years? Diapers to last until the child is out of them? Food for 1 or 2 or 5 years? All I'm saying is that there must be some limit and that the OP better be sure that he knows what that is. I highly doubt that a trustee would see someone that has 20k in their bank account and the explanation was that we bought food, daycare, diapers etc to last 5 years with that money rather than paying off their debts. That is all I'm saying. Maybe all that stuff as long as it is exempt items and not luxury items is allowed and I'm just naive.

I get what you're saying, perhaps my first post was not descriptive enough. Essentially, we have the luxury of knowing exactly when my wife will lose her job since she is teacher. She is contractually obligated to finish out the 2011-2012 school year once she returns from her maternity leave at the end of this month. The school year ends June and she will receive her last check on June 30th. Her school is combining classes and cutting others in order to lay off teachers to comply with budget cuts-she is one of those teachers. On July 1st she will file for unemployment, so we know that once that day comes, even though her $460/month student loan bill will go into deferment, there is no way we can pay our credit card minimums and stay current on our mortgage and car payment. Given that, we're trying to go into this as prepared as possible so that this is our first and last bankruptcy-AngelinaCatHub explained our situation best here:

Once you see the end of the dead end street, it is time to use the brake, not the accelerator. The realization and proper planning is the brake our OP is thinking of and I agree with this. It is only my opinion. 'Hub

July 1, 2012 is our "dead end street."

Anyway, back to your original points: The daycare for three months is just while my wife is back to work between returning from maternity leave and getting let go at the end of the year. We have no family, friends, or neighbors who can care for her five days per week while we work. We also can't just send her to any daycare because she has a lung condition-the surgeons at Children's Hospital in Philadelphia removed a tumor from her lung, extra vessels from her heart that weren't supposed to be there, etc...one month ago. As a result she needs care that a regular daycare cannot provide. Anyway, its going to cost us about $800 a month which we'll have to forgo credit card minimums to pay until my wife is laid off and can care for her while collecting unemployment. This will all be pre-filing-by the time we file my wife will have been on unemployment for about four months which will ensure that we'll be below median on our six month lookback.

Now for the food, diapers, etc... The way I see it the first 12 months post discharge are probably the most critical. I will still have my job and health benefits, thank God, but we can expect our medical expenses to rise because when my daughter received most of her care we had double medical coverage. We had no or minimal co-pays and basically everything (the anesthesia bill alone was $5000!) was covered. Once she is only covered under my insurance, it remains to be seen. As for food and diapers, she will be 13 months old when we file, so I would like to have the next 12 months of diapers, baby food, and non-perishables for us stocked up-I'm not talking about 5 years worth or something crazy like that. Basically I am hoping that with the help of a lawyer to guide us, the trustee will look at the totality of the circumstances and recognize that all we're trying to do is guard against this ever happening again. That bring me to the vehicle situation. Right now I have two trucks-one old beater and one daily driver. My wife has a 2001 Toyota Corolla with 160K miles. Car disasters (blown transmissions, engine problems, etc...) were part of what got us into this situation, so again, I am planning on, with the help of a lawyer, converting these assets into reliable transportation for both of us that will be exempt. My daily driver truck is worth about $6000 in the condition its in. If I can get that much the plan is to use a chunk of that to pay the lawyer (about $2000 for a no asset CH7 from what I'm seeing), another chunk to recondition my old beater truck into a reliable daily commuter vehicle, and the final chunk as a cash down payment on a new vehicle for my wife (the Corolla will go in trade). We're looking at a Kia for her because if you buy a Certified Pre-Owned vehicle from a Kia dealer you get a new 10 year/100K mile powertrain warranty with it, which will be worth its weight in gold for us should it break down for any reason while we're still getting back on our feet. I am planning on taking my truck to a shop for a top to bottom inspection with written estimates of what it would take to get the vehicle into good running condition-once I get the OK from the attorney I'll authorize and pay for the work. I'd like to purchase a Kia for myself as well but we will only have room in the post discharge budget for one $200/mo car payment max-no more. Therefore I need to just do all I can to make sure that my truck is reliable.

I hope that explains things a little better in terms of what I hope to accomplish over the next few months. I'll keep you all posted on our progress toward filing and what advice our lawyer gives us once we settle on one. We will be going for consultations toward the end of the month. I'd like to meet with at least three I think, based on what I've read here. Actually that reminds me-I have questions about the consultation-time for another post ;)

[basketsbears]

Yep, we agree to agree! LOL

I am only making this point because a different poster going along the lines of being able to purchase a new truck before filing went ahead and did it without really knowing exactly what they were allowed to spend. For that poster they may be ok despite themselves but I'd hate to see someone get themselves into a situation where they took advice and didn't totally understand exactly what the rules were. We've seen time and time again that someone does something without really thinking about it or investigating what they are and aren't allowed and hearing "but I thought....". Just didn't want to see that happen in this instance.

Keep in mind I don't know what the rules are and I may be talking out of my other end but I thought someone would chime in as to what would be reasonable.

Yes, we are the "truck" people. I would warn the OP to talk with attorney first (we did, but was to vague I guess - anyway - it is what it is and we will see what happens) as far as how much to "stockpile" etc before filing.

Also, someone mentioned about your wife coming to these boards. There is so much kindness and support here which has helped me so very much through the last few months. It is so nice to know that you are not alone through this. Also, most people are more than happy to share their expertise and their journey which helps to see that there is a light at the end of the tunnel.

Take care - Lynn

[Drazil65]

The first month of missed payments (on purpose as part of the preplanning) was by far the hardest. We are conditioned far a better part of our lives to "pay your creditors first", you used the card so pay your obligation, be a slave to your credit score etc... The bottom line is that while you are brainwashed into thinking that the banks rule your life and can up your rate for no reason (except that they are mad about regulations or whatever), add fees continually, will be bailed out when they are in trouble, we as consumers will forgo our basic needs in order to pay those minimums. Trust all of us that have been there done that (or we probably would not be here) the banks/creditors do not give a d--- about the new baby coming, or your impending lay off or anything else you have going on. Many of us tried to contact the banks for help before filing and got nowhere, they are not your friends.

Your wife will realize (and probably after she has continued to pay them for a couple of months) that you could have used that money. You are on the right track for preplanning and if you are both filing then she will want to be careful about paying one creditor and not the others up to filing as the trustees dont like when you choose one over the other (unsecured). See if you can get her to visit this forum and start reading everything she can, it might help her understand the strategy. Also, I might have mentioned it in another post you had but make sure your Google Voice is in place and the creditors have been contacted with the new number, it will so make life easier for the next couple of months. Good luck.

[keepsmiling]

It's been hard for almost everyone here to stop making payments. We all understand.
Perhaps you can get your wife to come here for a visit. We're a pretty friendly bunch.
Might be a good time to take care of any dental work you've been needing, or buy new glasses, new tires... that money get spent on plenty of needed things.

[shark66]

The real secret to a successful bk, is total honesty. With a pure heart, this can be read by most people including those bad ole' Trustees. A conniver can be recognized as well. These folks are pure, and between your help and Mrs. and my help, we will keep the other newbies on the right path. I really know you agree with me again. LOL. GBWY 'Hub

Very well said, 'Hub...

One small addition on my part: one has to know whether what they want to accomplish is doable by filing BK. In that respect, I believe that OP is on the right track. Paying for childcare while his wife is still employed makes perfect sense. Once she's laid off there goes that bill. Getting a newer car is also a very prudent idea.

Look, as long as you don't blatantly lie or do something downright stupid, the system can work *for* you in the same way it had worked *against* most of us for years. Buy a platinum bracelet six months before filing and you're toast but purchase 200 boxes of diapers and good luck to any Trustee attempting to prove hiding of assets...

I believe that OP's wife needs to get on with a program. Mine couldn't/wouldn't and that was one of the reasons I ended up filing by myself, which in the end has worked very well this far...

Good luck to us all.

[AngelinaCatHub]

Yep, we agree to agree! LOL

I am only making this point because a different poster going along the lines of being able to purchase a new truck before filing went ahead and did it without really knowing exactly what they were allowed to spend. For that poster they may be ok despite themselves but I'd hate to see someone get themselves into a situation where they took advice and didn't totally understand exactly what the rules were. We've seen time and time again that someone does something without really thinking about it or investigating what they are and aren't allowed and hearing "but I thought....". Just didn't want to see that happen in this instance.

Keep in mind I don't know what the rules are and I may be talking out of my other end but I thought someone would chime in as to what would be reasonable.

I also agree about both of us agreeing. LOL. I don't think this is so in this case. We being the Poster Children of whatever you could do wrong in a bk. Not out of stupidity, but because we were quite well off, this took us by real surprise (as most of us here can attest to) and were blindsided in ignorance. I think you have read our story.

I do understand what you said about one flying off into a mortgage in preparation for bankruptcy but with innocent ways. This is exactly why we stay on to aid those ill informed. We are fare from experts but also we have traveled far and could easily pro se if we were to do this over. We DON'T expect to do this again. LOL.

The real secret to a successful bk, is total honesty. With a pure heart, this can be read by most people including those bad ole' Trustees. A conniver can be recognized as well. These folks are pure, and between your help and Mrs. and my help, we will keep the other newbies on the right path. I really know you agree with me again. LOL. GBWY 'Hub

[mountanddo]

Yep, we agree to agree! LOL

I am only making this point because a different poster going along the lines of being able to purchase a new truck before filing went ahead and did it without really knowing exactly what they were allowed to spend. For that poster they may be ok despite themselves but I'd hate to see someone get themselves into a situation where they took advice and didn't totally understand exactly what the rules were. We've seen time and time again that someone does something without really thinking about it or investigating what they are and aren't allowed and hearing "but I thought....". Just didn't want to see that happen in this instance.

Keep in mind I don't know what the rules are and I may be talking out of my other end but I thought someone would chime in as to what would be reasonable.

[AngelinaCatHub]

Totally agree with you Hub but when is too much too much? 3 months of prepaid daycare? Why not just pay for 5 years? Diapers to last until the child is out of them? Food for 1 or 2 or 5 years? All I'm saying is that there must be some limit and that the OP better be sure that he knows what that is. I highly doubt that a trustee would see someone that has 20k in their bank account and the explanation was that we bought food, daycare, diapers etc to last 5 years with that money rather than paying off their debts. That is all I'm saying. Maybe all that stuff as long as it is exempt items and not luxury items is allowed and I'm just naive.

You are absolutely right. That was the part I missed in my post when I said I partially agreed. Our OP I am assuming is reasonable and if it went as far as what you indicated, that, then, would be "self dealing" and looked at very closely. It would be an abuse. If one were to be forced to stop within say, 90 days, and use that money wisely it would fly. To do this for a year and prepay for many years would not fly. Our OP mentioned to pay three months for his wife until her eminent lay off. That would be explainable.

I believe we are in agreement with each other, only in different ways. 'Hub

[mountanddo]

Totally agree with you Hub but when is too much too much? 3 months of prepaid daycare? Why not just pay for 5 years? Diapers to last until the child is out of them? Food for 1 or 2 or 5 years? All I'm saying is that there must be some limit and that the OP better be sure that he knows what that is. I highly doubt that a trustee would see someone that has 20k in their bank account and the explanation was that we bought food, daycare, diapers etc to last 5 years with that money rather than paying off their debts. That is all I'm saying. Maybe all that stuff as long as it is exempt items and not luxury items is allowed and I'm just naive.

[AngelinaCatHub]

I understand the concept of pre-bankruptcy planning to a point however I'm kinda with your wife here. Isn't there a limit to how much pre-planning you can do? I mean heck if everyone paid in advance for daycare and a year's worth of food we all could go bankrupt. There must be some sort of exemption amount that you probably should look at before you go hog wild in spending all your available cash. Explaining to the trustee why you bought enough food to fill your entire household up and did not pay your creditors is going to be an interesting conversation. Vehicles, in a Chapter 13 I understand as you probably won't get financing during and finding disposable income after filing will be tough but stockpiling because your wife will be laid off 6 months from now is hard to understand. Maybe I am way off here but the way this is worded seems like the OP is going to get himself in a situation that he might regret. Maybe having a lot of time inbetween doing this and filing will make it ok but then you'll be using some of that stockpile in the meantime. It seems that doing this 6 months before you file really is not right.

I have to partially agree and partially disagree. There is a difference in "constructive Bankruptcy" and planning your bankruptcy. One is, to beat the system to your profit. The other is the realization that you have no way to continue payments without dire circumstance that is on the near horizon. Purchasing exempt items spaced reasonably is not hiding assets. In fact in my opinion, everyone should have months of storable foods lay backed and at least three months of cash not in a bank. This is hard to do and for us as well.

If the OP could pay the multitude of his debt, he would. We did to the point we could not. Then, the realization that we are at our end. So, you stop paying so what to do with the excess cash? Pay just one? No, that is preferential and would do you no good. The best is to think now of yourself and family. Put it into things you need not to things you WANT! A bit of a difference, no? So food first, clothing and shelter. It is a good investment. Once you see the end of the dead end street, it is time to use the brake, not the accelerator. The realization and proper planning is the brake our OP is thinking of and I agree with this. It is only my opinion. 'Hub

[mountanddo]

I understand the concept of pre-bankruptcy planning to a point however I'm kinda with your wife here. Isn't there a limit to how much pre-planning you can do? I mean heck if everyone paid in advance for daycare and a year's worth of food we all could go bankrupt. There must be some sort of exemption amount that you probably should look at before you go hog wild in spending all your available cash. Explaining to the trustee why you bought enough food to fill your entire household up and did not pay your creditors is going to be an interesting conversation. Vehicles, in a Chapter 13 I understand as you probably won't get financing during and finding disposable income after filing will be tough but stockpiling because your wife will be laid off 6 months from now is hard to understand. Maybe I am way off here but the way this is worded seems like the OP is going to get himself in a situation that he might regret. Maybe having a lot of time inbetween doing this and filing will make it ok but then you'll be using some of that stockpile in the meantime. It seems that doing this 6 months before you file really is not right.

[Diesel73L]

Only if you could actually spend money on essential stuff that a trustee would not have a problem with would it be worth it to stop paying.

I'm planning on paying for three months of daycare (while my wife is still working), buying a low mileage used car (covered by exemptions of course) to replace my wife's 160K mile Corolla, baby food, diapers, wipes, and formula by the case, and literally as much non-perishable food as my house can hold. Groceries are the largest chunk of our budget (mostly because of all of the baby stuff) second only to our mortgage. I want to stockpile as much of that stuff as we can prior to filing because it will lighten the load for us later on. She sees the logic in that but is still convinced that the trustee is going to bring the hammer down on her because she "could have paid." Like I said, hopefully someone with a J.D. next to their name can convince her because I sure can't.

[JackBondLove]

I mentioned to her that she should stop her cards as well in February so that we can use the cash to begin to stockpile food, diapers, clothing, general supplies, etc...so that once we are discharged and she is unemployed we'll be better prepared. She is a teacher, God bless her, and if you know anything about teachers, they are about rules and conformity. She keeps saying to me that she "can't justify" not paying her cards when she knows she has the money to do so, even though paying down the debts will be meaningless in the end since they'll be discharged in CH7. She also convinced that "it will look bad" if the trustee sees that she had the ability to pay the minimums and chose not to. I have tried every way of explaining to her about BK pre-planning, strategic default, and everything else I've learned here, but she just can't get past the idea that "it's wrong" to not pay even when you can.

Only if you could actually spend money on essential stuff that a trustee would not have a problem with would it be worth it to stop paying. The trustee is only interested in you illegally squirreling away cash or perhaps purchasing non-essentially things (and even that is a bit of a stretch.) If you were to have leftover cash, the trustee would be happy to confiscate it from you.

The one good benefit of continuing to pay creditors is that it gives them less time to file a suit against you. What you should do is carefully think of stuff you want to buy, especially non-exempt essential stuff - or replacement of appliances, etc. - and total all that up, along with the attorney's fee - and figure out, based on your after-tax income, how much time earning your income you will need to accomplish that. You then tell your creditors that you have determined that your cash flow currently precludes you from making the debt payments, and you are considering BK as a remedy.

[basketsbears]

To the creditors, you are only a number, nothing more. To the CAs you are profit, nothing more. To each other, you are the World. Protect that. 'Hub

I love that. We, too, have struggled with paying, not paying, toughing it out, etc over the past few years. In the end, it seems like BK is best for our family as there has not been any way to deal with the foreclosure on the rental property (thank you BOA). We have to think of ourselves first. Thanks Hub!

[AngelinaCatHub]

Is it not amazing that spouses (of both sides) trust in strangers over their own mates? This is not a shameful thing. It is SELF PRESERVATION, and a business decision. As a teacher she can understand this. I have it worse, my wife is a quintessential LIBRARIAN and literal to her detriment. We both went through this as well. It is a moral situation, but it has to come home to your own preservation. After all is said and done, credit is gone on filing and saving yourself is for yourself. To the creditors, you are only a number, nothing more. To the CAs you are profit, nothing more. To each other, you are the World. Protect that. 'Hub