Huge credit card debt, no assets, how to explain to trustee?

[Flatbroke1]

After talking to credit counseling services, trying to work with our creditors using tips from Dave Ramsey counselors, talking to settlement companies and settlement lawyers, we finally were sued by BOA. I had thought all along the morally noble route would be to try to pay something rather than chapter 7. After receiving the summons from a Houston attorney, I thought to myself, "just forget it and file". I have contacted a Dallas lawyer and the filling paperwork is being processed. We will probably file by next week. Our 341 is projected to be at the end of the February. We have $58,000 with BOA, a Discover at $24,000 and a Discover at $11,000. We have no assets. (We are missionaries and tried to do something good, the wrong way....we are a little wiser now and never want to see another credit card as long as we live!!!). Supposing the Trustee will ask, why do we have such high balances with nothing to show? These debts are several old cards going back as far as 10 years (more or less). We refinanced old cards taking advantage of teaser rates. Over the years we also bought 3 used vehicles on cash advances rather than loans. The used vehicles ended up with huge repair costs, about $12,000 over the years as I recall. Probably about $22,000 was for the vehicles themselves. (2 vehicles have since been sold, the only vehicle we have left is run down and could probably sell for $2,000, but the title is free and clear). We had also put about $3000 or $4000 into a trailer that we sold a few years ago. We always paid on time so we had no problem merging old cards with new. At any rate all this debt snowballed and got out of control. During late 2007 and early 2008 I took 2 large cash advances to keep making payments while we figured out what to do. After we realized we were in trouble we stopped charging. Even on a connecting flight in London, we spent the night at the airport sleeping in the terminal seats rather than charge a hotel on our credit card (we still were in good standing at the time). We stopped making minimum payments in December 2008 and sent partial payments through March 2009. We started trying to settle since that time. We actually had a lawyer offering settlements for us since August 2009. We received the summons on Dec 30, 2009. Does this entire situation look like fraud? Will it look like we just charged and charged with no intent to ever pay? (We were making the payments so we never realized what a disaster was in the making). How do I explain my situation in a shorter version to the trustee, assuming they ask why so much debt with no assets? Surely they won't want a long story. I don't want to say too much and generate additional questions. Also, I will probably be like a "deer in the headlights" and my mind may go totally blank. Any suggestions from someone who has actually gone through a 341?

[StartingOver08]

Your situation does NOT sound like fraud at all. Your situation sounds very similar to most posters here - large unsecured debt and really nothing to show for it. Based on your post it does not sound like you have any red flags. Your last balance transfer/cash advance was more than a two yrs ago and you continued to pay for several months thereafter. You did everything (credit couseling, dave ramsey, tried to settle) and then you filed BK. It is a business decision - and a sound one.

Your 341 probably will be short and painless, like most here. Just answer the questions that the panel trustee asks, most are yes and no type questions with a few fill in the blank. (Search on this forum for the 341 questions, they have been posted many times). Don't volunteer information to the Trustee. The trustee is not looking for an explanation. It will be over before you know it.

[frogger]

I had thought all along the morally noble route would be to try to pay something rather than chapter 7.

Been there, done that. Filing Chapter 7 is not immoral, nor is it illegal. Bankruptcy has been a part of our law since the founding of our country.

What you are describing does not sound like fraud, just a mess of a situation that you, like many others are in.

Read the sticky posts, study up on the forum, and you'll find that as long as your honest, your 341 meeting will be a breeze.

Best of luck to you.

[Mi Bankruptcy]

You should be fine. You file the paperwork and interview more than one attorney. You want to have confidence in your attorney when you file.

The problem with Dave Ramsey is he scares people because he had a life changing experience when he filed bankruptcy. You can teach your kids and family what you did wrong without taking everything away from them and making everyone suffer by eating beans. What better way to teach your kids by admitting when you made mistakes. He does have some good things.

He should start his show out with Deuteronomy 15:1-9-- makes you kind of wonder where the 7 years for bankruptcy came from :o)

[frogger]

The problem with Dave Ramsey is he scares people because he had a life changing experience when he filed bankruptcy.

He should start his show out with Deuteronomy 15:1-9-- makes you kind of wonder where the 7 years for bankruptcy came from :o)

I understand where Dave is coming from, yet he a prime example of the pot calling the kettle black. We've all had a life changing experience by filing bankruptcy. It's a changing experience, but not a bad one. BK has been the most liberating experience that I have ever had in my life.

Dave has been there, done that, yet he is making money off others not filing. While I agree with many of the things he advises (in principal), Dave is nothing more than another snake oil salesman selling his products.

Everything about him is something for sale. A lot of good intentions, however Dave is making money. Never forget that.

There is no way that I could have followed his plans and it worked out for the benefit of my family. Don't get me wrong, I looked at it, but what he advises just would not have worked in my case.

Thanks, but no thanks on the Dave Ramsey plans............

[AngelinaCatHub]

The explanation that our host OP has given in enough to explain to any Trustee. They have just been awakened to reality as we all have in the past. The process is first, paying bills on time until it hurts. Then something big or small makes this a short fall and panic sets in. Then denial and hits on places like bill consolidation scams, and companies even inclusive of Dave Ramsey who I respect and enjoy his theoretical program, then doubt of success, a bit of shame, then realization there is no out but bk.

All that above said, bk is a tool of God and our Forefathers. God gave 7 years and jubilee. A year of healing. Bankruptcy is a business decision not to be applied to conscience. The Banks had no problem with raising in mid stream their interest rates and lowering unjustly their maximum amounts. To them, it was a business decision. They suffer the fall out if that is the straw breaking the bk back.

This is my opinion. 'Hub

[LimpDisc]

We had the same worries going into our 341 meeting last week and the trustee asked about our debt. We simply said that we made poor financial decisions.

[Flatbroke1]

thanks..

I like the way you state that...."poor financial decisions"....it puts my long paragraph into a nutshell...........

[calgirl67]

I tried the morally noble route and our 6 credit card companies I owe money to all laughed at me or told me to go away. I tried to pay small payments, settle the account, etc.. they were greedy and wanted 75%. I even told Citicards that if I can't settle these accounts I am going to have to file CH 7. The guy said this "do you know how many times a day I hear that hollow threat". Well its no hollow threat now!

So now I'm taking the 0% plan from my attorney's office. The banks made their business decision to protect their interests and now I'm making mine to protect my interests. Bankruptcy is not a sin, it does not mean you are a failure, it means you are finally facing your financial mistakes head-on and dealing with them. It is a financial tool provided by the United States government - we have the right to petition the courts to ask for a discharge of our debts when we are insolvent.

The hardest part for us was actually admitting we need to file BK...

[mtbc]

Right. My mortgage company -- IndyMac (since bought by OneWest) -- wouldn't work with me at all. I think they also thought that the threat of chapter 7 was hollow. I therefore didn't feel at all bad about proving to them that they can take me at my word. I started trying to work with them in February 2008 and they ended up foreclosing on and, last summer, auctioning a house that had by then stood abandoned for very many months (we had had to relocate for other reasons), that I'd originally offered to help them get a good price for if they would just work with me on any remaining deficiency. So they ended up with much less money than they would have if they'd just believed me in the first place.

[bobbyquefour]

I tried the morally noble route and our 6 credit card companies I owe money to all laughed at me or told me to go away. I tried to pay small payments, settle the account, etc.. they were greedy and wanted 75%. I even told Citicards that if I can't settle these accounts I am going to have to file CH 7. The guy said this "do you know how many times a day I hear that hollow threat". Well its no hollow threat now!

So now I'm taking the 0% plan from my attorney's office. The banks made their business decision to protect their interests and now I'm making mine to protect my interests. Bankruptcy is not a sin, it does not mean you are a failure, it means you are finally facing your financial mistakes head-on and dealing with them. It is a financial tool provided by the United States government - we have the right to petition the courts to ask for a discharge of our debts when we are insolvent.

The hardest part for us was actually admitting we need to file BK...

That has been--and still is--the hardest part for me...admitting that I actually needed to file....I needed to 5 years ago, but better late than never, I guess.

[nsupanda]

There is no way that I could have followed his plans and it worked out for the benefit of my family. Don't get me wrong, I looked at it, but what he advises just would not have worked in my case.

Thanks, but no thanks on the Dave Ramsey plans............

Me either. I haven't filed BK yet but my minimum payments on my CC's each month is $1400 and I can only afford $850. His advise is to do whatever you can to come up with a little more money than what the minimum is so that you can gradually pay off your cards (the snowball effect). How in the heck am I supposed to come up with another $600-$700 a month? I'm sorry, but even if I got a 2nd job (which I just cannot do because I devote about 70 hours per week to my 1st job) there's no way I could come up with that. And you can only have so many garage sales...

[wantout]

The TT in my case, never asked me why at all.....

[francis]

i fill the same way you do.i never ever want to see a credit card again.there just not worth it.i went through bk a few years back.and ill never be suckered in again by those money hungry cards.dont feel ashamed to go bankrupt.the way the economy has gone.theres just no other choice.

[Violet]

The hardest part for us was actually admitting we need to file BK...

My only regret is that I didn't file 3 years ago! I killed myself for 2 years making payments on debts I could never repay. Ramsey is full of it.

I think this guy is right on the money:

http://www.stayviolation.com/2008/02...ot-unders.html