Stuck between a rock and a Credit Card!

[ekorB]

My wife and I opened a CC account about a month or two ago. The funds were used strictly for her business. This business debt is the main reason why we will be filing Chapter 13 in the next couple of months.

I just received a letter in the mail stating that the CC has not received the first payment. From what I've been reading this is not good. It may appear that we opened this account and never intended to pay it. We do have the funds to make the minimum payment, but then it would look like preferential payment.

Am I on the right track here with my thought process? We've stopped paying on all the other CC's. Should I make any payments on this particular account given the circumstances?

[Flamingo]

Have you spoken with or retained an attorney? We made payments on everything (cars also) up until the time we retained our attorney who then advised us to stop. We filed two months after retaining our attorney. What you did with the credit card could appear as fraud.

[laurannm]

I don't believe it would be considered preferential unless the payments are over a certain amount (I think $500).

As Flamingo said I would speak to your attorney about this but typically you want to make 3 months worth of payments at a minimum before filing (this is at least applies to Ch 7 filings, not 100% sure about Ch 13 filings but I assume the same rule of thumb applies)

[ekorB]

Thanks flamingo and larannm, I'm emailing our atty right now.

[ekorB]

I'm diggin' my lawyer. I haven't even retained him yet, just went to his free consultation. I've been referred to him by 2 different people. Here is his response to my email: (his answers are in bold)


Hi Atty,

My wife and I came in to see you a several weeks ago for a free consultation. We plan on submitting our paperwork sometime next week so that we can proceed with our Chapter 13 bankruptcy filing. We had some follow up questions we'd like to ask:

1. A lot of our credit debt were from balance transfers. The funds were used directly for our business. Some of this activity was as early as 3 months ago. Will this hinder our case? No.

2. We stopped paying on all credit cards last month. The problem is, we had opened a credit card account a couple months ago prior to seeing you. The funds were used strictly for the business. I just received a letter in the mail stating that this credit card company has not received their first payment. From what I've been reading this is not good. It may appear as though we opened this account and never intended to pay it. We do have the funds to make the minimum payment. Would this be considered preferential payment if we paid it? It probably isn't much of an issue. If you make a payment of less than $600.00 it wouldn't have to be disclosed. If the payment exceeds $600.00 it would have to be disclosed but wouldn't be a problem as to you.

Am I on the right track here with my thought process? Should we make payments on this particular account given the circumstances? I don't think it is necessary as long as you weren't intending not to pay it when the debt was incurred.
******************************************

So, from what I gather, I'm OK with not paying this card. Even if I decided to start making payments, it would be ok as long as the payment isn't over $600.

[ekorB]

BTW...it only took him less than 2 hours to reply to my email. I think I have a winner here!