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Can we keep cash when we file chapter 13? Should we buy newer cars?

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  #1  
Old 05-09-13, 05:11 PM
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Can we keep cash when we file chapter 13? Should we buy newer cars?

We have about $3000 stashed away for emergencies. Schedule B requests we list cash on hand. Does that mean we have to give it up? It has taken us years to save it and it is all we have. All retirement funds have been cashed in and hubby is 59 1/2. Can we use the cash as part of the wildcard? I think including cars, we can have $3500 each? Also, our cars are about 10 years old each and over 100K miles. I know they allow over $400 for car payments. Should we go ahead and get newer used cars now before our credit is ruined? After bankruptcy is filed, getting cars loans at decent rates will be impossible for 7 years.
 
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  #2  
Old 05-10-13, 03:29 AM
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I'm no lawyer, and didn't stay at Holiday Inn last night, so any advice here is free and worth every penny of it.

I know nothing of filing bankruptcies, but how would the government or a bank know you had cash on hand. What would prompt you to even tell us you had that much cash on hand. Cash is cash with no paper trail, generally. If you go to the bank and cash out an account, then yeah, you have a paper trail. Saving cash over a long period of time is not only logical, but frugally expedient. Tell the government how much cash I have......they can kiss my grits.

As far as the cars go, depends on how reliable they are at this point. I drive a Dodge Ram with 420,000 miles on it, and look forward to 500k mark. Some cars aren't good much over 100k.
 
  #3  
Old 05-10-13, 03:50 AM
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The reason we would tell is the line asks how much do you have and we are signing a legal form stating we are telling the truth.

I agree cars can sometimes last a long time. However, we are having repairs here and there AND the biggest thing is we will likely not be able to get newer cars for 7 years unless we do it now, AND because people in bankruptcy have to get to work, they allow the provision for the car payments.

It just makes sense...we think...

I finally found this: (BTW, we have NO equity in our home)

1. REAL PROPERTY

A $17,425 exemption in real property (including a mobile home) is allowed if used as a primary residence or burial plot.

2. WILD CARD

We call this exemption the "wild card" because it can exempt $925, plus any unused portion of the $17,425 exemption listed in paragraph number 1 above, in any asset. In other words, if you do not claim an exemption in a residence, you have a $18,350 exemption that you can claim in any assets. This can be used to protect cash, savings accounts, vehicles, or just about any other asset you may own.
 
  #4  
Old 05-10-13, 04:29 AM
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I don't know much about bankruptcy either but I wouldn't be overly concerned about a car loan. It's my understanding that your credit can start being rebuilt the day after the bankruptcy. Apparently there are all kinds of loan companies that target those who have just went thru the bankruptcy process. One of my wife's kids filed bankruptcy and she cosigned a car loan for them a year later. 2 yrs after that they were able to get it refinanced in their name at a decent rate.
 
  #5  
Old 05-10-13, 04:41 AM
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Yes, but chapter 13 will last for 5 years. Our cars won't. Oh, did I mention I am in my mid 50's and hubby is 59 1/2? Don't want to wait too long into retirement age. Whatever that is.
 
  #6  
Old 05-10-13, 06:09 AM
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The government wastes a lot of money in ways they shouldn't, and don't feel obligated to tell us about it.
It's really not that much money (to them) and I wouldn't worry about it. They're not going to come in your house with a warrant to check it out. If it makes you feel better, I'd just tell them I have about $300. That'll work.
 
  #7  
Old 05-10-13, 06:20 AM
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I understand that you don't want to incur another debt, but have you talked with an attorney in your state? If not, that is where I would start, with the first question being something along the line of "how much would it cost for a 30 minute conversation". This probably won't be their first time down this path, so prepare yourself to get to the point, and see what they have to say. There may be options that you have not even considered.
 
  #8  
Old 05-10-13, 07:14 AM
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Here is my take on it. I try to be honest in all things, and pay my taxes. I don't look for loopholes, but if there are legal means to do something, then as far as the law is concerned, its okay. If someone pays me in cash, I still report that income, even though there is no paper trail, because of the spirit of the law... that you report all income in order to pay your fair share of taxes. So I respect and applaud your desire to honestly report the cash you have on hand. IMO the only way to keep your conscience clear is to either report the cash... or to not physically have the cash.

However, one legal thing you could do, is "gift" the money to a relative (that you know won't spend it!) and then if you ever need it, or want it back, they can "gift" it right back to you. I'm not totally sure what the $$$ limit is on gifting, but I don't think you're there yet. From what I can find online, it seems to be $13000 per person or $26000 for a married couple. Just an idea.
 
  #9  
Old 05-10-13, 11:46 AM
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As with the others, I have no personal experience with this, but do know a few people that have experienced it here (our rules a similar, but different).

If your emergency fund is cash in hand, burry it in the back yard and do not touch it or speak of it. If you ever need quick emergency money after filing, it will be hard to come by from respectable lenders, so only use it if its an absolute emergency.

As for the new car(s)... ask yourself; if you are filing now, your assuming you can't afford the new vehicle or to maintain status quo. Will this change after filing?
Understanding where you are coming from that after you file, it'll be tougher and more expensive to borrow, getting yourself into more debit before filing may not be the best either.

I would talk to a lawyer about your situation. There may be free services locally to assist with decisions.
 
  #10  
Old 05-10-13, 06:34 PM
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We met with the lawyer already. And we aren't talking about getting a new car. Just a newer car. We do have a wildcard in the amount of about $25K, from what I was told today. So our little emergency fund should be OK.
And yes we will be able to afford a car payment if we aren't paying $2000 a month in credit card debt or $25K to the IRS.
We cannot gift before bankruptcy. We can't even pay Hubby's dad any money we owe him. We would have to wait a year to file if we did.
 
  #11  
Old 05-11-13, 04:08 AM
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Don't get me wrong. Like XSleeper, I am an honest person. I pay my taxes and don't cheat anyone. BUT, the government can kiss my grits if they think I will tell them if I have any cash on hand. I doubt they will execute a search warrant to see if you have any laying on your bedside table or in a safe. I don't think you are living the lifestyle that will tend to set off alarms, anyway. Now, if you went out and spent $10k on a newer car, in cash, before you filed, or even after you filed, little lights would go off in the IRS offices. Just keep it stashed and tell no one you have it.
 
  #12  
Old 05-11-13, 05:22 AM
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Didn't know your time frame on this was so short. Yes, gifts would have to be made at least 1 year prior to your filing. Hopefully your small amount of cash will be covered by the exemption, even if you report it.
 
  #13  
Old 05-11-13, 06:22 AM
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Filing as quick as possible. We go about $1000 farther into debt a month. (We have an open ended loan set up for overdraft)
 
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