2 questions before filing ch 7?

[Anonymous]

Newbie folks..please forgive the questions. I did try to find the answers in this forum but was unsucessful.

I'm thinking about filing bk but wanted clarity on these 2 questions on the timing of my filing. It is now December and only a couple months from tax refunds.

NOTE - all credit still perfect(payment history never 30 days late) at this time..but limits may be high and FICO will reflect that.

1 - If I file chapter 7 today, by the time the case is discharged I would have already received my 2009 tax refund. (usually filed mid February). Will the court seize this refund?

2 -  With good reason, I need to buy a car worth only $4000 for college via financing. (**Before my brother's passing last year I promised that I would take care of his daughter through college).  By doing this..will the courts not look at this favorably to me e.g. Like why am I incurring new debt before going into bk.....

Again..newbie here and just need some guidance.  Have not yet met with an attorney but all things constant..it appears that I have no choice but to file bk as cc debts are way too high....

[Anonymous]

1.  Unless your income is below poverty or you have other significant circumstances, the court most likely will not allow a BK7.  They apply a means test based upon your income, cost of living and the outstanding debt.   And you must declare your pending tax return, which the court will determine what happens to it....so yes, they will most likely intercept it.

2.  Most likely you will be required to file Ch13 which will be a payment plan between 36 and 60 months.  The court will determine your payment based on your income.

3.  After your payment plan is completed, all remaining debt is discharged.

4.  If you obtain vehicle financing just prior to BK, yes the trustee may inquire why.

5.  If you file BK, the car will be repossessed.....it is a secured debt which has a lien on the vehicle....so this doesn't sound like it helps you family member.

6.  You need to speak to a BK attorney who can explain what your options, costs and likely payments will be.

Message Edited by txjohn on 12-01-2009 08:06 PM

[Anonymous]

Clarification> The car is for my niece to travel from home to school. Again..only with good reason am I buying this car. Will it be repo'd even if I can make the payments?

Secondly...should I wait until I get and exhaust my tax refund before filing? Or is this a "fraudulent" misrepresentation?

[Anonymous]

In BK13, you cannot choose which debts will be paid.

The auto is not necessary for you and your niece will not be considered an allowable responsibility for you.  Therefore, your disposible income will go to your creditors.

In BK 7 you can at time "re-affirm" certain debts, if approved by the court trustee.  If this car was your necessary transportation for you to get to work, then you could under those circumstances.

But you cannot buy on credit a non-essential auto and then use your income to pay for it while in BK.  This defrauds your legitimate creditors because you are diverting money from paying your current personal debts toward a debt to the benefit of your niece.

While it is nice that you want to help your niece, you cannot do this at the expense of your creditors...you are making them pay for your niece's car.

Message Edited by txjohn on 12-01-2009 08:39 PM

[scrubs]

last may  i had 341 meeting there was a couple before me that spend their tax refund check and the trustee went off on them and dismiss the case. my advice dont do it not worth it not only will the case be dismiss once you file for bk your credit report will have bk on it and any cc you have will close. also you will not be able to file for at least 6 to 12 months then you still have too give up your next fefund and went you file again you will have not one but two bk on your cr. do you really want to go though that?

[Anonymous]

---

@Anonymous wrote:

Clarification> The car is for my niece to travel from home to school. Again..only with good reason am I buying this car. Will it be repo'd even if I can make the payments?

Secondly...should I wait until I get and exhaust my tax refund before filing? Or is this a "fraudulent" misrepresentation?

---

Point of clarification:  unless you plan to "hide" the debt and not disclose to the trustee and attorney its existence, how would you do this?  When you submit your debt and payment plan, it will include a payment structure as a percentage of debt.  I doubt the trustee would allow you to include 100% payment to this auto for niece at the expense of less payment to other creditors.

And if you hide the loan and car, your BK can be dismissed later if found out that you held the debt outside BK and made payments.....discuss with your attorney carefully before making this decision.

[MyFico_704]

Since the car you're looking for is less than $4000 why don't you finance it today...and pay it off when you get your tax refund and then file bk???

Sounds easy but..I'm sure the trustee will question it...!