best pre-BK strategy?

What is the name of your state? CA

hello - I may need to file for BK in the coming months. between Husband and I, we have about $30k CC debt , some in both names and some in 1 persons name, 2 used cars with small loans ($3k each) and a newer car ($13k owed) in my name. We also have a house purchased in my name alone, mortgaged to 100%+LTV. No other assets, paychecks are spent as received.

Right now our credit is perfect (730+ scores). But I want to make sure my strategy will be ok for "pre-BK" planning....We were going to sell the 2 cheaper cars to our son so the loans would be paidoff and those cars out of our name....

Then me and Husband were going to apply for new credit cards in each of our names individually. I would keep all my cards at 0 balances, but we would move all the existing balances to new cards in his name only, with 0% offers to try to pay down the CC debt....we will try to make payments as best we can..

if we cant keep up with the payments, then can we have only HIM file Ch7 to wipe out the CCdebt, and can I still keep my CCs (which will all be at 0 balances?). Will I be able to keep the car thats in my name and the house if we can make those payments?

Help is appreciated!

[I AM ALWAYS LIABLE]

Originally posted by caligurl
What is the name of your state? CA

hello - I may need to file for BK in the coming months. between Husband and I, we have about $30k CC debt , some in both names and some in 1 persons name, 2 used cars with small loans ($3k each) and a newer car ($13k owed) in my name. We also have a house purchased in my name alone, mortgaged to 100%+LTV. No other assets, paychecks are spent as received.

Right now our credit is perfect (730+ scores). But I want to make sure my strategy will be ok for "pre-BK" planning....We were going to sell the 2 cheaper cars to our son so the loans would be paidoff and those cars out of our name....

Then me and Husband were going to apply for new credit cards in each of our names individually. I would keep all my cards at 0 balances, but we would move all the existing balances to new cards in his name only, with 0% offers to try to pay down the CC debt....we will try to make payments as best we can..

if we cant keep up with the payments, then can we have only HIM file Ch7 to wipe out the CCdebt, and can I still keep my CCs (which will all be at 0 balances?). Will I be able to keep the car thats in my name and the house if we can make those payments?

Help is appreciated!

My response:

You do realize, don't you, that California is a "community property" State, right? The reason why I mention this is because you appear to mention that having cards in his name or your name has some sort of legal significance to you. Under the law, it makes no difference whatsoever.

In short, whether it's in his name or your name, your both equally on the hook.

IAAL

[bigun]

You also assume you can get credit cards with 0% rates. CC's compamies will likely see the huge amount of debt you have and deny the offers-particularly if you are near the credit limit of your existing cards.
Also, never a good idea to transfer property to a family member if a bk is anticipated.
Most bk lawyers give free iniytial consultations. Talk with a couple and see what they suggest about pre-planning. The best pre-planning will involve moving nonexempt assets to exempt assets.

thanks for the tips...We still can get 0% offers, and I think with some planning we can put all the debt on 2-3 CCs using less than 50% of the credit lines, Ive been working this out at creditnet.com and I think we could get an additional $100k unsecured credit lines between the 2 of us, utilizing balance transfers, etc. I just dont want it to negatively impact us if we need to file BK....

So IAAL, what youre saying is we will BOTH need to file BK, even if the cards/loans are in 1 persons name only, and theres no way to 'salvage" one spouses credit?

[I AM ALWAYS LIABLE]

[quote]Originally posted by caligurl

So IAAL, what youre saying is we will BOTH need to file BK, even if the cards/loans are in 1 persons name only, and theres no way to 'salvage" one spouses credit?


My response:

That's exactly what I'm saying. In a community property State, when one spouse goes down, they both go down. Think about it - - when one spouse files BK, the creditors can look to the other, non-filing spouse, because California is a "What's mine is yours, and what's yours is mine" State.

IAAL

thanks so much for your advice!


So then whats the advantage to putting debt on cards which are under 1 persons name only? Is there any advantage at all in CA?

[I AM ALWAYS LIABLE]

My response:

Virtually none. Oh sure, if a card is in your name alone, a merchant has the choice of accepting it for use in making purchases, or not. The reason being is that a merchant doesn't know what you're marital status might be, and for all they know, you might be divorced, and a former spouse is trying to "charge up" the account.

However, during marriage, whether your name is on the card account or not, the debt is still "joint and several" - - and that's because of Community Property. So, not only are you entitled to a share of your spouse's wealth, you're also "entitled" to an equal share of debts and liabilities incurred during the marriage.

This is why California has "legal separation" - - which cuts the ties that bind".

IAAL

[Ladynred]

I hate to venture into disagreeing with IAAL on CA law and bankrutpcy, but what he stated just isn't 100% true:

"Think about it - - when one spouse files BK, the creditors can look to the other, non-filing spouse, because California is a "What's mine is yours, and what's yours is mine" State."

He is, of course, right about the community property, but, the BK law PROTECTS the non-filing spouse in a community property states from creditors included in the filing spouse's BK. As long as the 'community' exists, the non-filing spouse is protected. Should you divorce or die, then it would be possible for creditors to go after a non-filing spouse.

This reference to CP and BK was pointed out, to myself and others, by a BK atty:

"TITLE 11 > CHAPTER 5 > SUBCHAPTER II >
Sec. 524. Sec. 524. - Effect of discharge

(3)

operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect or recover from, or offset against, property of the debtor of the kind specified in section 541(a)(2) of this title that is acquired after the commencement of the case, on account of any allowable community claim, except a community claim that is excepted from discharge under section 523, 1228(a)(1), or 1328(a)(1) [1] of this title, or that would be so excepted, determined in accordance with the provisions of sections 523(c) and 523(d) of this title, in a case concerning the debtor's spouse commenced on the date of the filing of the petition in the case concerning the debtor, whether or not discharge of the debt based on such community claim is waived.

(b)

Subsection (a)(3) of this section does not apply if -

(1) (A)

the debtor's spouse is a debtor in a case under this title, or a bankrupt or a debtor in a case under the Bankruptcy Act, commenced within six years of the date of the filing of the petition in the case concerning the debtor; and

(B)
the court does not grant the debtor's spouse a discharge in such case concerning the debtor's spouse; or

(2) (A)

the court would not grant the debtor's spouse a discharge in a case under chapter 7 of this title concerning such spouse commenced on the date of the filing of the petition in the case concerning the debtor; and

(B)
a determination that the court would not so grant such discharge is made by the bankruptcy court within the time and in the manner provided for a determination under section 727 of this title of whether a debtor is granted a discharge. "


You can read that section here:
[url]http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode11&STEMMER=en&WORDS=spous+commun+properti+&COLOUR=Red&STYLE=s&URL=/uscode/11/524.html#muscat_highlighter_first_match[/url]

[HomeGuru]

Originally posted by Ladynred
I hate to venture into disagreeing with IAAL on CA law and bankrutpcy, but what he stated just isn't 100% true:

"Think about it - - when one spouse files BK, the creditors can look to the other, non-filing spouse, because California is a "What's mine is yours, and what's yours is mine" State."

He is, of course, right about the community property, but, the BK law PROTECTS the non-filing spouse in a community property states from creditors included in the filing spouse's BK. As long as the 'community' exists, the non-filing spouse is protected. Should you divorce or die, then it would be possible for creditors to go after a non-filing spouse.

This reference to CP and BK was pointed out, to myself and others, by a BK atty:

"TITLE 11 > CHAPTER 5 > SUBCHAPTER II >
Sec. 524. Sec. 524. - Effect of discharge

(3)

operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect or recover from, or offset against, property of the debtor of the kind specified in section 541(a)(2) of this title that is acquired after the commencement of the case, on account of any allowable community claim, except a community claim that is excepted from discharge under section 523, 1228(a)(1), or 1328(a)(1) [1] of this title, or that would be so excepted, determined in accordance with the provisions of sections 523(c) and 523(d) of this title, in a case concerning the debtor's spouse commenced on the date of the filing of the petition in the case concerning the debtor, whether or not discharge of the debt based on such community claim is waived.

(b)

Subsection (a)(3) of this section does not apply if -

(1) (A)

the debtor's spouse is a debtor in a case under this title, or a bankrupt or a debtor in a case under the Bankruptcy Act, commenced within six years of the date of the filing of the petition in the case concerning the debtor; and

(B)
the court does not grant the debtor's spouse a discharge in such case concerning the debtor's spouse; or

(2) (A)

the court would not grant the debtor's spouse a discharge in a case under chapter 7 of this title concerning such spouse commenced on the date of the filing of the petition in the case concerning the debtor; and

(B)
a determination that the court would not so grant such discharge is made by the bankruptcy court within the time and in the manner provided for a determination under section 727 of this title of whether a debtor is granted a discharge. "


You can read that section here:
[url]http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode11&STEMMER=en&WORDS=spous+commun+properti+&COLOUR=Red&STYLE=s&URL=/uscode/11/524.html#muscat_highlighter_first_match[/url]

[Ladynred]

Ok, my dear HG, your point was what ????

Ladynred, thanks for your input - so does that mean that just 1 of us can file BK, and our strategy to place all debts to be discharged in accounts in 1 persons name only can protect the other spouses credit rating??

[Ladynred]

What it means is if all debts are put into 1 person's name (and that will not be as easy as you might think !), the non-filing spouse is protected from harrassment by those creditors just as if he/she had ALSO filed. The bankruptcy should NOT appear on the credit report of the non-filing spouse.

is "protected from creditor harassment" the same as "protected from liability"? Meaning, that OK the creditors cant harass the non filing spouse to collect, but can they still sue the non filing spouse for the debts?

Since we have no assets whatsoever and the house is fully mortgaged, im not worried about losing anything, I would just like to preserve one of our credit ratings so we can move on....

we went to our 341 A meeting yesterday - open court so you where in there with about 50-80 people got to her some interesting cases, keys handed over, money handed over, 2 quads, a business and yours sounds just like a lady that was there -

She is married with 13 kids 7 at home and thought since all the credit cards where in her name only that she can file like that and the trustee said no your BOTH HAVE to file also since az is a community property State , so of course the trustee wants her husbands accounts and ect- Her case still open.

The trustee finds out information that you will be suprised - accounts transfered, many other items

Another one was some one thought they could hid a truck and no such luck trustee had DMV records and Insurance records on this.

So it is best not to hid things.

who said anything about hiding things? We dont want to hide anything, since we dont have anything, just preserve 1 persons credit so we can move on...

The used cars that have small loans will be bought and paidoff by the kids since they are the kids cars anyway...and this would be a long time before needing to file BK, if thats what we end up needing to do.