Fresh BK7 Filing (well will be filed Tuesday)... Long post within

[Anonymous]

A Brief Introduction...

For  me, this is my second BK7 (filed a little over 12 years ago when my first business went bust, and I was left holding the bag on a significant amount of money when my partner fled the country.... ), For my wife, this is her first, This last 2 months have been excruciating for her, she is completely stressed out and not taking this well.  However this is our only option to move forward in life. 

I am an independant consultant (IT) and while I have a very good income, I have old debs, very old debts, very old and very large debts to the IRS from my younger years when I was not so responsible.  I made mistakes, and the IRS has taken to teach me a lesson I already learned, they have been uncooperative, and unwilling to work with myself or my attorney, and their last payment plan was 85% of my gross income, you read that right 85% of my GROSS!  Just insane how these people can sleep at night.  

My attorney approached me about 2 months ago, citing that even though I would not meet the means test, I could back door a BK7 utilizing a clause for business debt, or non consumer debt to be more precise.  As long as >51% of my debt is non comsumer (IRS debt is considered Compulsury, and non comsumer) you can bypass the means test.  This Blew my mind. I never thought BK was an option for me, PERIOD! We continued to do some research and began putting it all together, and upon legal advice, we have included all of our debts, except 1 (our truck I will get to why we are reaffirming that in a moment). 

In effect we are hitting the soft reset button on our financial lives, while this does not remove all IRS debt, it brings the number down by a significant 6 figure sum.  A payment arrangement with the new ammount is something I could feasibly pay off in a few years, rather than lifetimes.  

We are reaffirming our truck for 2 reasons.  we really need an automobile, and we have to have a truck setup for towing (as part of my business we lease a mobile workspace to take on site with us for 5-6 month long projects with leased equipment inside as well, this works out great so we do not have to try to setup temporary shop every time we get a client in a new area, which is increeibly often). So we are keeping our HD truck. 

For those of you who have filed, I would like to know, did you find the legal requirements to file as absurd as I did? the credit counseling is a JOKE, the excemptions (for my state at least) are just silly low (600 dollars cash on hand), and the rest of it feels like we are literally jumping through some of the most rediculous hoops ever just to file.

Our Attorney has been great, and so far they have advised us that dependent on which trustee we get, this could either be a slam dunk or a breeze haha... 

OK all of that bakstory out of the way on to a few questions about rebuilding post discharge.  

We have a financial instituion that we currently bank with and really like.  we are unfortunatly being required to include them in the BK as they are revolving debt and we did not pay them off early enough before filing to not be accused of preferential debt payments.  We however are planning on paying the debt post BK if they allow it.  First off, is this a good idea? or should we just begin anew with a new financial instition?  The other reason for wanting to keep this particular relationship intact is that they offer a great credit building program we are considering taking advantage of.  A secured personal loan (up to 10,000 dollars) and a securied credit card (also up to 10,000 dollars) with the same money... a 2:1 secured to credit line ratio seems like it would be a good thing.  Is this a good or bad thing to do immediatly post discharge? does it matter we had an account with them pre BK7? and if we were to do it, what ammounts would be most advantageous to building credit? and would it be a wise idea to do this in both the wife and I's name as to increase our overall number of lines of credit to 4 (say a 10k deposit in the secured loan, take the 10k into a second secured loan, and split that 10k into 2 5k secured credit cards??) .

Also, if we were to follow the BK7 to 700 ni 24 months plan, we included Cap one in our BK, are they likely to reissue us credit so soon post BK7?  

Our initial plan was to just take the loan/secured card route from our bank, and sit on it for 6-9 moths, then figure out something else small to apply for, or possibly apply for a very small car loan (with a significant down payment).  

The best part of this BK7 for us, we do get to start over, and this will free up a significant amount of capital every month, allowing us to finaly begin saving. The funny thing about owing money to a group or person who can literally take whatever they want, whenever they want, is it encourages you to always be in spend mode, spend spend spend, if we dont, they will just take it! and we have lived that life for years now, I feel like Monty Brewster (Brewsters millions) right now, I am actually SICK of spending money... 

now that my novel is complete haha I hope someone takes the time to read, and give any advice they can I rebuilt my credit last time by accident, and it was never that solid, its time to finaly get on the bandwagon of not paying 10%+ interest on every loan I was ever able to take out, or being flat unable to secure financing because of the IRS 

Thanks

PS either way I intend to update this post with my BK7 experiences, and post BK7 as we move forward, just to document the process, and in case any ever finds there way here with a similar issue to mine.

[Pway]

Congrats on taking the first step to getting your financial house back in order.  We all know that bk is not an easy choice but it's something that has to be done.  My bk case was a simple one, it was not as complex as yours.  

We have a financial instituion that we currently bank with and really like.  we are unfortunatly being required to include them in the BK as they are revolving debt and we did not pay them off early enough before filing to not be accused of preferential debt payments.  We however are planning on paying the debt post BK if they allow it.  First off, is this a good idea? or should we just begin anew with a new financial instition?  The other reason for wanting to keep this particular relationship intact is that they offer a great credit building program we are considering taking advantage of.  A secured personal loan (up to 10,000 dollars) and a securied credit card (also up to 10,000 dollars) with the same money... a 2:1 secured to credit line ratio seems like it would be a good thing.  Is this a good or bad thing to do immediatly post discharge? does it matter we had an account with them pre BK7? and if we were to do it, what ammounts would be most advantageous to building credit? and would it be a wise idea to do this in both the wife and I's name as to increase our overall number of lines of credit to 4 (say a 10k deposit in the secured loan, take the 10k into a second secured loan, and split that 10k into 2 5k secured credit cards??) .

Some is going to agree while others is going to disagree with paying back a creditor jsut to get back in with them after a bk.  I personally would not pay back a creditor to get back in with them after a bk.  Remember that just because you may pay them back they may not let you back in with them right away with lending.  There aare many other lenders as well as banks and credit unions that offer the same products as your current bank.  I will forever be a lifelong member to my credit union, they was the first to help me rebuild my credit after my bk.  

As far as with Capital One they are one of the most forgiving lenders that I know of.  I included them in my bk as well and about six months or so I was able to get a new credit card with them and it has grown along the way as my credit has improved drastically.  

[Anonymous]

Thanks for the reply.. I agree we may not be allowed back in, but we have built a pretty solid foundation of a relationship with our bank... and would like to keep it (My business accounts are there as well.)  We will likely have a chat with the bank on our own on Wednesday (were closing our personal accounts under the approval of our attorney to prevent any overdrafts and creditors from having scheuled payments succeed while we are going through the bk itself, plus we just want a clean slate to start budgeting from). I will ask specifically if we do or do not pay back the CC debt how will that effect the relatioship we have with the bank, and how will it effect our ability to gain credit in the future (both secured and unsecured) and see what their stance is.  

Honestly I wish we could have gotten them to a 0 balance prior to the BK... we pay them on time every month, and will probably continue to do so as long as we are allowed during the BK process as a show of good faith.

[BearsAndTurtlesRtheBest]

I felt the same way with Citi who is my current financial institution, so I paid off my Citi credit card before filing just because I didn't want to have to switch all my automatic payments, direct deposit and most of all close the account. Plus honestly I haven't had any issues with Citi and enjoy banking with them because I can use any Banamex ATM in Mexico and not get charged a fee which is a plus that way I'm not carrying cash, and we constantly go visit family over there . But other than that Citi will most likely not lend me anything in the next 10 years which is okay for now. Let us know what they tell you when you go speak with them, good luck!