Ap risk: charging cards while unemployed...

[Alapuna]

Hi there,

I was unemployed for the past 3 years. While unemployed I opened 3 credits cards(4000, 4500, 1200$ limits) yes I lied on credit card application about income. During the last 1.5 years the cards got full and the last charge was made 7 month ago. If I file for chapter 7 now will this creditors hit me with AP.
Or how to go about this ?


Thanks

[AngelinaCat]

Hi Alapuna, welcome to the Forum.

Have you made any payments toward these cards? That would help you if you did. If you haven't made any payments, then yes, they could pursue you for 'bad faith'. However, the longer you leave them be, and make no more new charges on them, the less likely it is that you will be hit with an AP.

[Alapuna]

Yes I did 3-4 payments after the last charge

[AngelinaCatHub]

Yes I did 3-4 payments after the last charge

To distance yourself from this possibility, it would be good to make minimum payments if you can, for two or three months.

It is not likely that they would AP you for as little as four K, but they could. In the fact that you were not truthful on the paperwork, you breached the condition of use and fraud could be charged. It could be considered as an orchestrated bankruptcy to discharge debt. This would be fraud.

On the other hand, if you just can't pay them, they will eventually sue you and a Judgement is not good. My advice is answer ALL paperwork honestly but don't over-speak. Just tell the truth and be totally honest with the BK paperwork. The BK Court abhor a lie. You are dealing with the Feds with BK. I think you will be fine through the BK since you have given up the use for more than 180 days. 'Hub

P.S. The 180 days is the standard "look back" for new accounts or spending large amounts of money with intent to defraud. You are far beyond that. It is not a guarantee as the Court can look back further if they suspect a problem. They are not likely to do that in your case.

[LadyInTheRed]

Yes, the creditors could file APs. But, they are not likely to for $4,500 and less. They will probably not even look back to see if you lied on your application. It isn't easy enough for them to verify what your income was at the time you applied for the cards for them to do it routinely.

It may be that some attorneys will recommend not using cards within 180 days of filing, but I am unaware of anything in the law regarding a 180 day look back for incurring debt. In my lay person's opinion, the advice is conservative. A debt is only presumed to be non-dischargeable if it is for over $500 in luxury goods and services charged within 90 days of filing or cash advances of over $750 within 70 days of filing. See 11 USC § 523(a)(2)(C). If charges don't meet that criteria, the creditor must prove they were fraudulent. For the amounts involved, the creditors are not likely to bother trying. Sure, they could probably prove that you lied on the credit card applications. But, I don't think they'll ever get to the point of noticing that.

If you are going to file for Chap 7, I would not make any payments on these debts. I would go for several free consultations with BK attorneys and include this question in your list of questions.

[frogger]

IMO, your risk of an AP is minimal.