Last straw...filing BK

[Shrike1070]

What is the name of your state? Colorado

I posted in the Banking and Credit Card forums just yesterday and Ladynred gave me some good advice on the timeline for how a judgement process works.

Well, to recap, I am about $56K in debt between CC's, federal taxes, and student loans. I am single without children making approx $36K a year working two jobs. Up to this point I have been able to work out payment arrangements with MOST of my creditors, except for CitiBank and the people who have bought and sold the account over the course of the last 2 years. Last week I received a letter of Notice of Default and Consumer's Right to Cure from a local attorney (I guess - and I'm pretty confident they are who they say they are) representing the latest CA . Basically they told me I had until the end of this week to contact them to make arrangements for full payment of $22K (original charge-off was $11K). I called them today and was basically laughed off the phone for trying to attempt a payment arrangement at this late stage. Told me they'd see me in court, in so many words. Needless to say it's not going to get that far as I've decided to file bankruptcy and contact an attorney shortly to do so. Couple of questions though:

1) One of my payment arrangements for another creditor is through my bank account. They automatically deduct the payment at the end of each month through an electronic check already set up. I have heard that it is not wise to continue paying creditors, besides car loans and house payment, near to a BK filing date. How should I get out from under this payment? Should I close my bank account without warning, or take all of the funds out now? Will this create a "bounced" check and if so do I create even further problems?

2) When filing BK, how do they do "means testing"? Paying each of my bills each month leaves me very little extra money, but if I stopped paying everything I owe to creditors, then I would have plenty of disposible income. I have heard you can only have an extra $100 per month after all living expenses are met in order to file BK. And currently I have probably an extra $200 or so a month, after living expenses and paying the montly payments to creditors, which I put in a savings account. And yes, I have offered to give that entire extra $200 per month amount to all of the CA who have hounded me re: this Citibank debt and none has wanted to accept such a "low payment".

As always, your advice is much appreciated!
S

[Ladynred]

1) Call or go to your bank and put a stop to the authorization that allows them to dip into your account. If you tell them that payments are no longer authorized by you, then it should stop it. However, it may be easier to close the account completely and open a new one somewhere else.

2) There currently is no 'means test'. The disposable income number of $100 or less after all normal living expenses is correct and paying creditors is NOT a 'normal living expense'. However, you need to list expenses as they WOULD be if you weren't sacrificing to pay creditors. The biggest mistake people make is to underestimate their REAL living expenses.