chapter 7- money in bank account

[julie35]

What is the name of your state? IL

I am planning on filing chapter 7 in 2 weeks. I had a student loan cosigned by my mother that she has paid off in order to protect her credit ($1800). First- was this OK to do? Secondly- I plan on paying her back...when is it OK for me to do this? I also have a question about the money in my bank account- I have read on here that I should take money out of my account prior to filing...do I have to prove to the trustee where this money has gone? Can I start to pay my mother back prior to filing- in cash? Please advise-I just want to follow the rules...

Her credit would have been fine... I was in the same situation with you... I had student loans as was more worried that my mother's credit would be ruined. Read up and research your states Bankruptcy laws... I'm sure someone will correct me if I'm wrong, but Student Loans CANNOT be included in a bankruptcy unless you can prove that paying them back would create a very large burden on you... Your mother didn't need to pay it off because you were filing for bankruptcy. Whoever your loan is thru, Sallie Mae, etc., will defer the payments until after your discharge.

As for money in your bank account... Once again this is for Arizona, so RESEARCH your BK laws. I had to provide 6 months worth of pay stubs, and bank records... I hope you didn't buy anything fancy or a new computer within that six months... You also can't have transfered large amounts of money out of your account. On the day the BK was filed at the court house, I had to have no more than $150.00 combined in my savings and checking account.

[Ladynred]

Do NOT pay your mother back anything until after the bankrutpcy is discharged. Any payments to family prior to filing looks VERY bad. Mom can wait

The Trustees know that people have to pay bills, but it would be best if you file on a day when your bank account is at its lowest point. Do not just withdraw a lump sum, that would look very susupicious. Keep reciepts for anything you buy in cash.

[julie35]

Thanks for the previous advice...Very helpful...and no- I have not purchased anything over $600 in the last 6 months...What is the timeline for Illinois? About how long after filing does it take to get a discharge? And, another question- now that I am not paying anyone anything, after I file there will be significantly more money in my account while I wait for the meeting/discharge. How does that look to the trustee? Is there a price limit that I should consider when deciding what receipts to ask for/keep? Again- I just want to follow the rules...

[Ladynred]

Aside from the load on the court docket, the timeline is basically the same for everyone. You file your papers. Approximately 30 days after that you have your 341 meeting. After the meeting, you wait 60 days to give any creditors the chance to object to your filing - most never do. On day 61, if no one has objected, your discharge is granted. That is the basic timeline. The load on the court docket may delay your 341 meeting and a Trustee can delay the 60 day waiting period, but that usually only happens if problems arise.

If you're showing a LOT of 'extra' money w/o paying creditors, you could have a disposable income problem. What do you have left after you pay all of your normal living expenses each month - and that does NOT include payments to creditors. You want that disposable income number as low as possible.

Keeping receipts is just a CYA kinda thing that I saw as a recommendation from a BK lawyer. You may never need them, but better to have them and not need them than the other way around.