Meeting with Atty on Wed.

[starting over]

What is the name of your state?undefinedWhat is the name of your state? Kentucky

I am finally divorced after 1 1/2 year separation. My ex & I were supposed to file a joint BK a long time ago, but it never happened. My divorce attorney advised me to wait until the divorce was final, then file as an individual to have my portion of our debts discharged.

I contacted a BK lawyer today, he advised me of the new law effective in 60 days & I have a meeting with him on Wed. to get the process started.

Heres my problem, on Oct 15, 2004 my X & I sold our home. I received approximately 15,000 from the sale & bought a new/used car (I have another car which was paid off, but it was falling apart on me) I spent about $7000 on the new car & just kept the one that needed work instead of trading it in. I also paid my Mom about $5000.00 from money both my X & I owed her from the last several years & paid my Dad $800.00 from what I owed him (car repairs) The rest of the money was used to move when I took custody of my niece & nephew, since I needed a larger place to live (4 kids)

My lawyer told me that I am only entitled to $2500.00 in vehicle equity & since both cars are paid off, that I either have to sell one of them to an outside party, non family member, or pay approx. $2000.00 in order to keep my Durango. Actually, I don't want it. I can't afford to drive it, it is a V8 & my Stratus is a V4 & is now drivable (at least today it is)

I know this is a question that I should be asking my lawyer & I will, but what kind of mess have I gotten myself into? A year ago I thought about a BK, but decided not to do it. Now, circumstances have changed & I feel that I have to. What will the trustee say about the equity I received from the home, am I going to have to pay it to the courts since it can be considered "preferential" payments to my parents? My Mom doesn't have the money anymore & it was rightfully owed to her. Since the laws are changing, I have to act now & I don't have the benefit of being outside the 1 year rule. At least I think there is a 1 year rule. Any advice?

Thanks in advance for you help.

 

[Ladynred]

The payments to your parents could definitely be a BIG problem as they ARE preferential. The Trustee could go as far as suing your parents to get that money back to distribute to your creditors. While you do owe it to your parents to pay it back, you have no LEGAL obligation to do so, no formal loan agreement, they don't hold any liens against anything of yours, so as far as the Trustee is concerned, you should have paid the creditors you DO have a contractual agreement to pay back.

As for the rest of the money, hopefully you have SOME record of where it went.

If you don't want the Durango, let the Trustee have it, selling it at this point in the game is only going to be yet another problem. Unfortunately, you won't get anything out of it, maybe part of the exemption, if its not all eaten up by the Stratus. If you sell the Durango now, the Trustee is going to get virutally all the money you'd get for it anyway, so its really 6 of one, 1/2 dozen of the other.

 

[starting over]

Some other questions

Ladynred, Thank you so much for your response. It was exactly the response that my attorney provided to me.

He suggested that I wait until the new BK laws take effect, however he said that he has not received all of the forms on the new laws & wouldn't for approx 2 weeks. So he is not sure of alot of the aspects of the new law (hmmm, maybe that might be a red flag) He told me that his fees increase from 500 to 4500 with the new laws, but would make a deal with me to do mine for 2500. His reasoning was that my parents would be sued for the money that I paid to them. If I wait, then I won't have to claim the home equity as income & therefore the payments to my parents would be a non-issue????

Now, since all of the conversation with my parents about BK, they want to co-sign for a loan to pay of my debts. Originally, I thought I was in debt approx 40,000 but after pulling my CR's, it is only 14,500. + about 2,000 that isn't showing up, but I know that I owe.

I am going to be getting remarried early next year, which do you feel that would be best. Should I file under the new laws & erase everything or take out a loan that I could afford to make the payments on? My fiance' has very good credit & I want my past issues resolved one way or the other in order for us to be able to move forward. Which would actually look better long term? My thoughts are if I pay what I owe, even with a loan (current) on my report that the loan would be a step to re-establishing. Am I way off base here? To boot, my parents (72 & 83) are within days of deeding me 2 acres of their property to build something on or to put a mobile home on (I know IAAL would have a field day with this comment...lol)

Alot going on, alot of major decisions to make & I seriously don't want to make matters worse. Any advice is greatly appreciated

Thanks again

 

[Ladynred]

If I wait, then I won't have to claim the home equity as income & therefore the payments to my parents would be a non-issue????

I'm not sure I understand that reasoning. Chances are, in your situation, you may not be able to file CH 7 under the new law and you'll be shoved into a 5 year Ch 13 !! If your income is more than your state's median, forget Ch 7. They are going to be even MORE aggressive with transfers of assets, allowing a Trustee to go as far back as 10 YEARS looking at property transfers ??

If this lawyer isn't up on the new law yet, and it takes effect in about 6 weeks, I'd be RUNNING to another lawyer !

If you have the option to get all your debts paid and NOT file bankruptcy.. DO IT. As long as you can afford to pay it, its a much better move for your credit in the long run.

 

[starting over]

I'm not sure I understand that reasoning. Chances are, in your situation, you may not be able to file CH 7 under the new law and you'll be shoved into a 5 year Ch 13 !! If your income is more than your state's median, forget Ch 7. They are going to be even MORE aggressive with transfers of assets, allowing a Trustee to go as far back as 10 YEARS looking at property transfers ??

If this lawyer isn't up on the new law yet, and it takes effect in about 6 weeks, I'd be RUNNING to another lawyer !

If you have the option to get all your debts paid and NOT file bankruptcy.. DO IT. As long as you can afford to pay it, its a much better move for your credit in the long run.

Again, Thank you

My understanding of his reasoning, at least what he said to me, is that under the new laws the 1 year rule would still apply & therefore we should wait until the year expired, then I wouldn't have to even mention the sale of the home or the payments to my parents in the paperwork. I had concerns when he said this, especially since he said that he wouldn't have the forms for yet another 2 weeks. This BK lawyer has been doing BK's for 20 years, but however 20 years under the "old" laws.

Im not a naive person, I do have some concerns about his interpretations of the new laws.....that's why I was looking here for second opininions. My income is below the state median, so Ch 7 would still be an option, but if I did file, then I would have property in my name as well.......just typing this out, gives me a headache.

How would I find out what the new BK laws are? My lawyer told me the there are 500 pages of changes & maybe I should get comfortable & start reading up a bit.

 

[Ladynred]

Yes, the new law is a monster.. and its a real OGRE. .not nice to the debtor AT ALL. It was all bought and paid for by the credit card companies thru..er..'campaign contributions' - $40 MILLION worth. Its most certainly NOT for our benefit.

You can start reading the changes here.. great source, good stuff to read:

http://abiworld.net/bankbill/