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Pre-bankruptcy: Should I be paying bills?

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dave024
New Contributor

Pre-bankruptcy: Should I be paying bills?

I am currently contemplating bankruptcy and I need to schedule a meeting with a bankruptcy attorney. I owe over 200% of my annual income on credit cards, and have been unable to make monthly payments recently. I haven't had any recent changes in income. Monthly payments with a credit counseling service would take 95% of my current take home pay and take five years.

 

I am in a bit of a waiting period at the moment as I have recent charges and cash advances within the last 90/70 days and I don't want those to be assumed to be fraudulent.

 

I recently received bills for medical services from a couple different places. I'm not talking huge bills. $40 here, $150 there. Should I bother to pay these? Won't they just be discharged in bankruptcy? Can these places refuse to treat me in the future after my bankruptcy because of the unpaid bills? Neither was for emergency services.

 

My checking account(s) may be overdrafted. Is this another debt that would just be discharged in bankruptcy? Would it still affect my chexsystems report? I have my future paychecks being sent to new banks that I don't owe any money to. Any advice on how to handle a checking account that has a line of credit attached to it? Can I close the checking account so the line of credit payments stop getting deducted and overdrafting the account?

 

Utility bills. Should I still be paying my gas and electric bill? This is another debt that it would seem would almost just go away after bankruptcy. I guess I would need to time it right to avoid a shutoff.

 

Also a bit unrelated to my previous questions I'm trying to better understand how my car loan would be impacted by a bankruptcy chapter 7. I have a co-signer on that loan and all payments are current. I'm thinking I want to reaffirm that loan. I don't want my bankruptcy to negatively affect my co-signer at all. If anyone has any advice on how that would be handled to that would be great.

 

Any advice would be appreciated. Located in Maryland, USA. Thanks!

Message 1 of 13
12 REPLIES 12
Anonymous
Not applicable

Re: Pre-bankruptcy: Should I be paying bills?


@dave024 wrote:

I am currently contemplating bankruptcy and I need to schedule a meeting with a bankruptcy attorney. I owe over 200% of my annual income on credit cards, and have been unable to make monthly payments recently. I haven't had any recent changes in income. Monthly payments with a credit counseling service would take 95% of my current take home pay and take five years.

 

I am in a bit of a waiting period at the moment as I have recent charges and cash advances within the last 90/70 days and I don't want those to be assumed to be fraudulent. - You can talk with your attorney about this, however I doubt you would look as fraudulent since it was never your intention since you were basically using them to live. Again, ask your attorney.

 

I recently received bills for medical services from a couple different places. I'm not talking huge bills. $40 here, $150 there. Should I bother to pay these? Won't they just be discharged in bankruptcy? Can these places refuse to treat me in the future after my bankruptcy because of the unpaid bills? Neither was for emergency services. - If it's a small private clinic or a mom/pop clinic or doctor then they *could* refuse to see you, however there aren't many of those anymore. if it's a chain, or a larger clinic or hospital they won't refuse service for non pay. I wouldn't bother paying them honestly, just include them in your creditor list and move on.

 

My checking account(s) may be overdrafted. Is this another debt that would just be discharged in bankruptcy? Would it still affect my chexsystems report? I have my future paychecks being sent to new banks that I don't owe any money to. Any advice on how to handle a checking account that has a line of credit attached to it? Can I close the checking account so the line of credit payments stop getting deducted and overdrafting the account? - If you're filing BK don't worry about any overdrafted accounts. Just make sure to tell your attorney so they include them in your filing. I believe you can send Chex your BK discharge and they will delete the reports if any with your request. There are forums here that cover this. If your checking is negative, the institution won't let you close the account unless you bring is positive, like I said don't bother just make sure to include them.

 

Utility bills. Should I still be paying my gas and electric bill? This is another debt that it would seem would almost just go away after bankruptcy. I guess I would need to time it right to avoid a shutoff. - You can include the utilities,however if it was a utility that required you to give them a deposit to activate services, then you should be ready to give them another deposit. If they didn't require a deposit, then you should be able to include them and be good to go. I would ask your attorney, however don't make payments on the past balances, just the current monthly bill amount. Once they get the BK papers there's a stay, and they can't shut your services off.

 

Also a bit unrelated to my previous questions I'm trying to better understand how my car loan would be impacted by a bankruptcy chapter 7. I have a co-signer on that loan and all payments are current. I'm thinking I want to reaffirm that loan. I don't want my bankruptcy to negatively affect my co-signer at all. If anyone has any advice on how that would be handled to that would be great. - You would need to continue to pay the car loan so it doesn't fall on your co-signer to pick up the payments. You don't need to reaffirm to keep paying, you can basically pay and keep the car. I wouldn't reaffirm, the BK only effects YOU not the co-signer negatively. The only way this would go against the co-signer is if you decided to not pay, then they would go after them for payment, if it was ever repoed that would show on the co-signer's credit, as well as any late payments etc. Basically the loan will continue to report as nothing happened on the co-signer. You could always contact the lien holder and make sure if you continue to pay, they will be happy. Most will say yes, I worked at a small CU and they wanted co-signers to refi the debt into just their name if the primary wasn't going to pay. I doubt this is the norm, and just their weird quirk, but it wouldn't hurt to just double check. If the loan is attached to any other debts you have with them, they might cross collateralize it thus making you pay them for EVERYTHING not just the car. Generally if you went to the lender directly and not through a dealer then it's a direct loan and they can/do/will - if it's indirect they can't do anything about cross collateralizing it since 99% of the time it's not in the paperwork you signed at the dealer.

 

Any advice would be appreciated. Located in Maryland, USA. Thanks!


 

Message 2 of 13
Anonymous
Not applicable

Re: Pre-bankruptcy: Should I be paying bills?

Dave, why are you contemplating? Meet with a BK attorney ASAP. Most will give you an initial consult and assessment of your situation for free. If you have options, he will lay them out for you. By the description you gave, it doesn't sound like you have a ton of options. Swallow your pride and do it.

 

If you do go the BK route, a lot of us have recently been through it and can let you know what happens next. Once that sucker is discharged, it will feel like a 10-ton weight is lifted off of you. I'm still in shock that my future isn't hopeless. It felt like it was for so long that it became normal.

Message 3 of 13
dave024
New Contributor

Re: Pre-bankruptcy: Should I be paying bills?


@Anonymous wrote:

@dave024 wrote:

 

I am in a bit of a waiting period at the moment as I have recent charges and cash advances within the last 90/70 days and I don't want those to be assumed to be fraudulent. - You can talk with your attorney about this, however I doubt you would look as fraudulent since it was never your intention since you were basically using them to live. Again, ask your attorney.

 


 


Thanks for all your answers. My charges are definitely large enough to be considered fraudulent. From what I hear cash advances over $950 in the past 70 days and luxury items over $675 for the past 90 days are presumed fraudulent. I actually have amounts well above those limits, so I'm not sure if it could be advantageous to wait even longer than the 70/90 days. I definitely made some mistakes. I have some defenses to those charges, but I'm sure things would be better if I put more time behind them.

 

Are there any disadvantages to putting off bankruptcy a couple more months? It's not like I have any judgements or anything yet.

Message 4 of 13
StartingOver10
Moderator Emerita

Re: Pre-bankruptcy: Should I be paying bills?


@dave024 wrote:

@Anonymous wrote:

@dave024 wrote:

 

I am in a bit of a waiting period at the moment as I have recent charges and cash advances within the last 90/70 days and I don't want those to be assumed to be fraudulent. - You can talk with your attorney about this, however I doubt you would look as fraudulent since it was never your intention since you were basically using them to live. Again, ask your attorney.

 


 


Thanks for all your answers. My charges are definitely large enough to be considered fraudulent. From what I hear cash advances over $950 in the past 70 days and luxury items over $675 for the past 90 days are presumed fraudulent. I actually have amounts well above those limits, so I'm not sure if it could be advantageous to wait even longer than the 70/90 days. I definitely made some mistakes. I have some defenses to those charges, but I'm sure things would be better if I put more time behind them.

 

Are there any disadvantages to putting off bankruptcy a couple more months? It's not like I have any judgements or anything yet.


No, there are no disadvantages to putting off filing bankruptcy a couple of months (from your post).  

I agree with you Dave, it is best to put some time between those cash advances and luxury purchases and the filing.

 

Also, consider paying your utilities throughout.  They will come back after you file and ask for large deposits so it saves in the long run if you don't have to put up those deposits.  Naturally, if you can't then that is different, but I suggest staying current with your utilities. 

 

Do you have any of the luxury items you can return or is it too late for that?  Seems like you just purchased them within the last couple of months. The trustee does look at those purchases and the timeline. At least my trustee did. I had to provide credit card statements for each card + bank statements so the trustee could see the transactions. The paperwork you provide to your attorney for the trustee is extensive. 

Message 5 of 13
Anonymous
Not applicable

Re: Pre-bankruptcy: Should I be paying bills?


@StartingOver10 wrote:

@dave024 wrote:

@Anonymous wrote:

@dave024 wrote:

 

I am in a bit of a waiting period at the moment as I have recent charges and cash advances within the last 90/70 days and I don't want those to be assumed to be fraudulent. - You can talk with your attorney about this, however I doubt you would look as fraudulent since it was never your intention since you were basically using them to live. Again, ask your attorney.

 


 


Thanks for all your answers. My charges are definitely large enough to be considered fraudulent. From what I hear cash advances over $950 in the past 70 days and luxury items over $675 for the past 90 days are presumed fraudulent. I actually have amounts well above those limits, so I'm not sure if it could be advantageous to wait even longer than the 70/90 days. I definitely made some mistakes. I have some defenses to those charges, but I'm sure things would be better if I put more time behind them.

 

Are there any disadvantages to putting off bankruptcy a couple more months? It's not like I have any judgements or anything yet.


No, there are no disadvantages to putting off filing bankruptcy a couple of months (from your post).  

I agree with you Dave, it is best to put some time between those cash advances and luxury purchases and the filing.

 

Also, consider paying your utilities throughout.  They will come back after you file and ask for large deposits so it saves in the long run if you don't have to put up those deposits.  Naturally, if you can't then that is different, but I suggest staying current with your utilities. 

 

Do you have any of the luxury items you can return or is it too late for that?  Seems like you just purchased them within the last couple of months. The trustee does look at those purchases and the timeline. At least my trustee did. I had to provide credit card statements for each card + bank statements so the trustee could see the transactions. The paperwork you provide to your attorney for the trustee is extensive. 


It wouldn't hurt you to do a free consult, if you already haven't. We had purchased a vacuum that was financed about 60 days prior to filing. I had brought it up with the attorney since I knew it was a "luxury" item, he said not to worry about it. I know in some areas the trustee is more of a ball buster than other areas. Our trustee didn't care, her main issue was why my husband's W2 had a different SS than his SS card (his employer who is no longer in business transposted a number), and how I got the value of our house, since it's low (due to us living in rural Oregon) and she wasn't used to that since she was from a metro area.

Message 6 of 13
dave024
New Contributor

Re: Pre-bankruptcy: Should I be paying bills?

I did scheduled a consultation with a local lawyer next week. I will see how that goes. It doesn't sound like I am in any hurry to do this. At the moment I have no available credit and I'm starting to learn to live off only my current income, so that's a new experience.

 

I think I have well over $5000 in recent cash advances on a Capital One Card. Also several thousand dollars in miscellaneous items some of which could be considered luxury items. I didn't make a single payment on the Capital One card. I did not make these purchases/cash advances with the intention of not paying them back, but it's looking now like I won't be able to pay them back. Ideally I don't want them pinned on me for being too recent when I file for bankruptcy. I think the transactions do look suspicious enough that it could cause me problems, so I definitely want to wait the 70/90 days and maybe even a little more.

Message 7 of 13
StartingOver10
Moderator Emerita

Re: Pre-bankruptcy: Should I be paying bills?


@dave024 wrote:

I did scheduled a consultation with a local lawyer next week. I will see how that goes. It doesn't sound like I am in any hurry to do this. At the moment I have no available credit and I'm starting to learn to live off only my current income, so that's a new experience.

 

I think I have well over $5000 in recent cash advances on a Capital One Card. Also several thousand dollars in miscellaneous items some of which could be considered luxury items. I didn't make a single payment on the Capital One card. I did not make these purchases/cash advances with the intention of not paying them back, but it's looking now like I won't be able to pay them back. Ideally I don't want them pinned on me for being too recent when I file for bankruptcy. I think the transactions do look suspicious enough that it could cause me problems, so I definitely want to wait the 70/90 days and maybe even a little more.


Yes, based on this post, more time is important.  $5000 is significant in the bk world.  

 

Quick story - not about a cash advance, but I borrowed $1000 from my brother about 14 months before I filed Bk and I paid him back the following month.  The trustee in my case made a big point in my 341 meeting about my borrowing the $1000 and repaying my brother the $1000 - even though it was over one year before the filing date.  I was successfully discharged, but they did go through my paperwork with a fine tooth comb.  The trustee was very hard on this point - thankfully I had an excellent attorney. 

 

IMO it would serve you better to wait much longer than the minimum time period. You might also consider making payments on those cash advances. $5k is a lot. Hopefully, the Bk attorney you are meeting is a good one and not one of those "mill type" attorney's and not a BK attorney that also serves creditors.  Make sure the attorney(s) you interview with work with debtors only. IMO it would not be wise to get one that was a trustee because they have a creditor mindset. JMO

 

Please read this: http://www.nolo.com/legal-encyclopedia/credit-cards-cash-advances-before-bankruptcy.html

Message 8 of 13
Anonymous
Not applicable

Re: Pre-bankruptcy: Should I be paying bills?


@dave024 wrote:

I did scheduled a consultation with a local lawyer next week. I will see how that goes. It doesn't sound like I am in any hurry to do this. At the moment I have no available credit and I'm starting to learn to live off only my current income, so that's a new experience.

 

I think I have well over $5000 in recent cash advances on a Capital One Card. Also several thousand dollars in miscellaneous items some of which could be considered luxury items. I didn't make a single payment on the Capital One card. I did not make these purchases/cash advances with the intention of not paying them back, but it's looking now like I won't be able to pay them back. Ideally I don't want them pinned on me for being too recent when I file for bankruptcy. I think the transactions do look suspicious enough that it could cause me problems, so I definitely want to wait the 70/90 days and maybe even a little more.


You got the Cap1 card and ran up cash advances and other charges and never paid one single payment?

Message 9 of 13
Anonymous
Not applicable

Re: Pre-bankruptcy: Should I be paying bills?

I'm no expert on this, but if you put well over $5000in cash advances and several thousand in luxury purchases on a card and never paid a payment, it seems like that would be highly suspect. I wouldn't even think that waiting 90 days would make a difference.
Message 10 of 13
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