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trying to avoid BK/Questions for Ladynred

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supergivingmom

Guest
What is the name of your state? Illinois

I was referred to you by Observer from Card Report.

I am 61, hoping to retire by age 66. I am deep in debt from helping mentally ill, adult daughter. (She can't get SSD and is doing better but still needs help.) Therefore, I am not ready to file BK yet. My credit is excellent, I am not past due on anything but....using cc's each month to keep it this way. BK may be inevitable but need to delay for awhile. I can't begin to tell you how stressed I am.

Thank you in advance for comments, advice, feedback. I've been reading these threads for several days and see that they are a lifesaver for many.

Assets:
$12,000 in 401K
Plus 4,000 in 401K when I finish paying loan ($122 mo.)
Varied household items (no great value)
New computer, chgd and paid off in past 3 mos. (pd with
rebates and amended tax refund due to being HOH when
she lived with me in '02. (She is teaching school and
needed computer so I bought one for me and she is using
as needed.)

Debts:
Car 25 pymts at $320 per mo. (KBB trade value $5055)
Student Loan $4200 (Deferred till 4/'04, then $114 mo.)
Eight CC's Total balance $18,000 Pymts per mo. $400
Above mentioned 401K Loan (payroll deducted)

Income: Gross $2500 Net $1900 after all deductions

Through an expense calculator, I can definitely list my expenses, rent, etc. and all others expenses, including car payment, medications, etc. easily within the $100 or zero margin I have seen in these threads. I will list them if you so desire. Trying to save space now.

Last week, I filled out paperwork to withdraw $2800 from my 401K ($12,000 value above is after such withdrawal). I will h ave $2400 after the tax penalty of 20%. Stupid move but I felt desperate. I also might have a Christmas bonus (around $500) and have a small savings of $500. I will use all to help my daughter further, do car repairs, a little for Christmas and pay off some of the smaller debts I have.

Questions are:
1) IF I must file eventually, which? Ch. 7 or 13 I want to keep car.
2) What about 2 CC's I opened within last 2 mos. with low interest and did balance transfers (total of $4000)?
3) What about cash advances of $2000 on my Credit Union charge account (within last three mos.) ?
4) If I use my Discover card with zero balance and $7000 available to do more transfers, what will happen if I must file BK later (April or early summer)?
5) Can I keep my car? Probably my last, once I retire, won't be able to buy another very easily. good car, actually, if I take care of it, will get another 100,000 miles from it---maybe.
6) What about "preferential" payments? Will above transfers, cash advances, shuffling, be seen as fradulent?
7) I have 4 store CC's and 2 other CC's with zero balances. I won't charge on them but will they be closed on me if I file BK. Not that I need them all, just curious.
8) If I can't continue to hold it together, how long should I wait till I file BK?

Thank you so much for your input. Sorry for the length of this.

toogiving super giving mom
 


Ladynred

Senior Member
[1) IF I must file eventually, which? Ch. 7 or 13 I want to keep car.]

** Given your listed assets, CH 7 would probably work for you and you can probably keep your car - its a secured debt and you can reaffirm it and keep paying. IF you don't have a lot of home equity or non-exempt assets, CH 13 probably isn't necessary.

[2) What about 2 CC's I opened within last 2 mos. with low interest and did balance transfers (total of $4000)?]

** You have to list ALL debts, so these would have to go. The BT's shouldn't be a problem, people shuffle this way all the time.

[3) What about cash advances of $2000 on my Credit Union charge account (within last three mos.) ?]

** Cash advances are a little hairier. They can be looked at for up to a year before you file. However, if you can show the money was used for NECESSITIES, they may still be discharged. Be careful with the credit union. Look at your membership and cash advance paperwork and make SURE that the CU has not cross-collateralized on you. That's one of their 'tricks' to get paid even when people file BK.

[4) If I use my Discover card with zero balance and $7000 available to do more transfers, what will happen if I must file BK later (April or early summer)?]

** BT is just shuffling debt around and if that's all you do, you should be ok. However, ANY credit card use should cease at least 90 days before you file.

[5) Can I keep my car?]

** see my answer to #1

[6) What about "preferential" payments? Will above transfers, cash advances, shuffling, be seen as fradulent?]

** No. Preferential payments are payments of $600 or more that you pay to family members, friends, or unsecured creditors (favoring one over others).

[7) I have 4 store CC's and 2 other CC's with zero balances. I won't charge on them but will they be closed on me if I file BK. Not that I need them all, just curious.]

** It is highly likely they'll be closed, but its not a foregone conclusion. It all depends on the creditor. Since they are zero balance you don't have to include them in your BK and you may find one or more of them stay open. Its hard to say for sure.

[8) If I can't continue to hold it together, how long should I wait till I file BK?]

** That's an entirely individual decision. There's nothing that says you HAVE to be delinquent on bills to file, although its generally recommended to stop paying on CCs if you know you're going to file. Why throw the money down a rat hole ? You can use that money to live on or pay for your lawyer. Creditors will annoy you with collection calls, but any legal action is highly unlikely until after charge-off (6 months of non-payment).

Here's a link to the IL exemptions so you know what you're dealing with:

http://www.thebankruptcysite.com/exemptions/illinois.htm
 
S

supergivingmom

Guest
thank you and one more question

A sincere thanks, Ladynred, for your responses. It helps me to be better able to make informed decisions in the months ahead.

One more thing I forgot to mention.

My other daughter could not buy a car several years ago and I had it financed and titled in my name only. The creditor would not even put her on the note with me as co-signer. Anyway, she made all payments on this car and three weeks ago, she paid off the note in full and (with my approval and signature) traded the car off for a new vehicle. The new vehicle is totally in her name and her credit.

IF I file for BK eventually, will that car that was in my name be a hindrance in anyway? As I see it, I had a car and a loan against it, the loan is paid and the car is gone. No money gained. But, how would the courts see it if I end up filing BK? (especially if I go Ch. 7 which is the route I would prefer).

Thanks again.
 

Ladynred

Senior Member
I don't think it would be a problem at all. Property transfers made within 1 year of filing for BK are looked at, but if there are any questions about it, just explain the facts. Its not as if it was your car and you suddenly decided to dump it. ;) I really doubt anyone would claim it as a 'fraudulent' transfer of property. Just make sure you tell your lawyer when the time comes.
 

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