chapter 7 in GA

[rocky12]

Ok - I am posting this as a new thread b/c a lot has changed and my questions are totally new. We have talked with attorneys and have decided on one (I think) - I got alot of different opinions and I don't know how to know if my attorney is trustworthy or just telling me what I want to hear to get me to file with him. So if any of this sounds out of line to anyone or raises a red flag PLEASE tell me your thoughts before we hire him. We have around 100K in unsecured debt - we own a home with no equity - own a car with about 7K in equity . Ou income is 80K - family of 6. He says we can do a BK7 and keep the house for sure and most likely the car. i am surprised that our income will allow for a 7 - thought for sure we'd have to do 13 - I am glad but skeptical - I can't find an easy way to figure the median income in GA - I have seen very different figures in different places. Also - Is it normal for them to ask for money up front at the first meeting? We talked extensivly on the phone and he says bring him all our info and a portion of the fees and he'll get it filed quickly. We want to act quick b/c Am Ex is threatening suit now but I don't want to make the wrong decision. Please tell me if all of this sounds normal. Thanks in advance and to all of those who have already replied to my other thread ! This site is so helpful.

Oh - one more ? We cashed out an IRA inherited from father in law - used it for home improvements - We did this is June - He says it will not be a problem if it was not in the last 6 months? Is this sounding correct?

[LadynRed]

For a family of 6, the median income in GA would be 80,511 (66,900 family if 4 + 13,800 for the extra 2 people), so you MIGHT just squeak in a Ch 7. I'd say it's a bit optimistic to say he can absolutely get you a Ch 7 w/o seeing all your figures first.

http://www.usdoj.gov/ust/eo/bapcpa/20080101/bci_data/median_income_table.htm

keep the house for sure and most likely the car.

Considering you have almost no equity that would be right on the house and probably so on the car too. You'd probably have to reaffirm them both anyway.

Also - Is it normal for them to ask for money up front at the first meeting?

Yes, but only if you are actually going to HIRE this guy.

he says bring him all our info and a portion of the fees and he'll get it filed quickly.

Whoa there. IF you qualify for a Ch7, ALL of his fees are going to have to be paid BEFORE you file. In addition to that, you MUST go thru the credit counseling session before you can file at all, and you cannot get the counseling today and file tomorrow, courts aren't liking that 11th hour stuff.

We want to act quick b/c Am Ex is threatening suit now but I don't want to make the wrong decision.

If AMEX is only just threatening and the account hasn't even charged-off yet, you're months away from them filing a lawsuit. They'll do a lot of sword-rattling before then.

We cashed out an IRA inherited from father in law - used it for home improvements - We did this is June - He says it will not be a problem if it was not in the last 6 months? Is this sounding correct?

Yes, but make sure you have all the receipts to show where every penny of it went just in case.

[bingo]

BK lawyers won't file until the fee is paid. On mine, I paid 50% the day I retained him and the balance the day the petition was filed.

The IRA won't be a problem.

Nobody can really tell how you stand until you fill out scgedules I and J. Income and expenses. That'll show how much disposable income you have. Have you gotten that far ?

[rocky12]

No we have not filled out any forms yet. How will our disposable income factor into a chapter 7? I do think now that he said we'd need to pay him what we could at our meeting and then the rest when he filed. I talked to cccs and they said they could do counseling this week. We'll do it right away - but will that keep us from being able to file soon? Thanks for the info on Am. Ex. I guess we have a little more time than I thought - I've been cringing every time the doorbell rings.

I think we are OK on the income for 7 b/c the 80k income has only been being paid since 10/07 when he started this job - Before that he was self employed with his company that was making nothing - so the income for the last 6 months is way lower than 40K.

Ok now my other big question which my husband and I were just discussing - and this is huge - What to do about travel expenses for his job. He absolutly has to travel a lot the next month or so - His boss is meeting him in other states and so he has no choice - He has to book airline and rental cars. The attny. told us if we pay a cc off and have a zero balance we should be able to keep that out of the BK and use that for business after. I dont know how to make sure that is true - If not then we are wasting 2K b/c that is our lowest balance on a card. AND then what would we do in the meantime between filing and finishing? We can ask his mom to GIVE not loan - a couple of thousand to put in the bank and use cash for travel - but will the trustee be looking at that and will that create a problem? What happens with your checking acct. after you file? Anything? I know that just go t long winded - But can anyone offer a suggestion for us on this issue - Travel expenses are soemthing we have to be able to figure out now - after we file - and after it's done. Please help! He does not want to let his employer know about any of this now - The job is going well and it is the ONLY thing keeping us from forclosure and drowning in general -

[LadynRed]

I talked to cccs and they said they could do counseling this week. We'll do it right away - but will that keep us from being able to file soon?

As long as the cccs is approved by the Trustee, and as long as you get your certificate to file with your petition, it should not cause a delay.

How will our disposable income factor into a chapter 7?

Disposable income is THE biggest factor in the Means Test after your median income. Even with your income below the median, you have as much as $100/mo left over, you could still wind up on a Ch 13. In a Ch 13, disposable income is most of what determines your monthly payments.

What to do about travel expenses for his job

Go for a secured credit card - you deposit $2K with the issuer and that is your 'credit line'. Trustees run into this all the time where people MUST have a credit card for their jobs. In this case, you MAY be allowed to reaffirm the credit card since it's reimbursed expenses and will get paid. The problem is whether or not the creditor will keep the account open.

The attny. told us if we pay a cc off and have a zero balance we should be able to keep that out of the BK and use that for business after.

I wouldn't count on that at all. Hate to argue with an attorney, but most creditors will close credit card accounts even if you have a ZERO balance. A lot depends on the creditor. You might try reaffirming this one and find out if the creditor will keep it OPEN if you do. If not, don't reaffirm it.

a couple of thousand to put in the bank and use cash for travel - but will the trustee be looking at that and will that create a problem?

Cash on hand like that is an asset and definitely of interest to the Trustee, regardless of how it may be 'earmarked' for use. I think this would be a risky thing to do.

[Krash]

got a question, just to know what about a family of three counting me and making 48g a year? I have been wandering about it since they changed the laws and just thought i would ask..

[rocky12]

We did decide it was too risky to try to count on keeping that card so what about a secured card? Can you open one up for now before we have filed or should we wait until after we file? A family member will put up the money to do that - but could a family member also secure the card with her credit? Without her having to put up the money? Either way can we do that now or wait until after we file.

Also - attny. advised also not to keep money in the acct. before we file - But he says the trustee will not look at our acct. again AFTER we file and nobody will know what we put in there..I found that hard to believe - We could have no money in acct. the day we file but the next week have someone give us cash to use for bills etc. and that won't be an issue?

Also - about the means test - Our income is going to be well below the median for the last 6 months b/c of unemplyment part of that time - Could we still be forced into 13 based on his current salary from oct. to present - or will he be able to tellus for sure what we qualify for and what assets will be exempt? I thought once you filed it was determined that you qualify for 7. He says he does not need a list of assets etc. now - I am a little worried about this guy - but i have talked to several others and didnt get any info from them.

[bingo]

Get a family memeber to make you an authorized user on a card.

You just have to know what your disposable income is before anyone can tell you if you qualify for a Chapter 7. I'd insist that the lawyer figure this out for you at your consultation. Take a list of hh bills with you. Also, you can't count as a monthly expense debt you wish to discharge.

[LadynRed]

As for the bank account - you will have to supply several months worth of bank statements and to be prepared I'd have a YEARS worth at the ready, just in case. The Trustee won't physically look at your bank accounts, you are swearing that the amounts on your schedules are ACCURATE - and you'll want to have the bank statement that shows your balance on the day your petition was filed handy too.

Since bankruptcy is a snapshot of your financial house on the day you file, what you put in a bank account AFTER the filing date generally doesn't matter. However, FUTURE income, income made after you file, CAN come under scrutiny per some recent case law.

[rocky12]

Get a family memeber to make you an authorized user on a card.

.

My mom in law does not want to open another cc acct. in her name but has plenty of cash so she wants to open a new checking acct in her name and list my husband as an AU on the acct. and give him a debit card (visa) that he can use for travel - as he is remimbursed he will put it back into the acct. My question is will this acct be seen as an asset when we file and any money in it at that time be subject to be taken by the trustee? He will not be a joint owner on the acct - just an authorized user. If it would be subject then could we just make sure mom in law withdraws any money the day before we file so that it is empty. Or would we even have to list it?

[LadynRed]

My question is will this acct be seen as an asset when we file and any money in it at that time be subject to be taken by the trustee?

If his name is on that account and he has access to that cash, then YES it is an asset and YES it becomes property of the bankruptcy estate and subject to the Trustee's control.

Withdrawing the day BEFORE would not look good and could cause trouble.

Set this up AFTER your petition is filed and it shouldn't be an issue - its post-petition. Definitely bring this to the attention of whatever lawyer you hire so (s)he's aware of it.

[rocky12]

Well it is too late now. They already set up an acct. He had to have money to travel for business the next week or two. I think it will be a week or so before we file and a lot of that will be spent by then so I am thinking we should just keep reciepts to show that it was all money given to him by his mom and used for business expenses and some of it to pay household bills that we have to get caught up on befor we file (house and car not)- It won't be a problem if it's spent will it? he told the lawyer yesterday tha he was doing this and the lawyer said we'll just make sure there is not any money in there before we file.

[LadynRed]

Well, in that case he's right, make sure there's nothing or close to it in the account at the time of filing. Have all the receipts as you noted and it shouldn't be a problem as your DH has to travel for his job.