Is min. payment of non-filing/working Spouse C.Card every month allowed?

[smkrishna]

I talked to an Ch.13 attorney yesterday who gave me total confidence about ease of Ch.13. She charges me only $1500 for Ch.13. She promises me that I can easily go for $100 - $200 payment plan for 3 years because of my annual income is just $70k with no income from my wife and 2 kids. I am planning to go for BK in another 2 or 3 months.

There are couple of questions that I forgot to ask her and want to get your opinion:


a) I have a credit card in my wife's name and I am an authorized user. We have been using this card for almost 2 years mainly. Attorney told me to remove my name before BK and then I can add it back after BK. Why do I need to like this as my wife is the primary user? If I don't stop using, why is it a problem with Ch.13 since the statement has been going with her name and transactions can't be differentiated between my and my wife's c.card usage?

b)As my wife is not working, I show one of my expense is to pay this credit card every month. Can trustee/creditor ask this question of why do I need to take care of her expense when I am not showing any income?

c) I applied for Kohl's store credit card last month and I made few small purchases and I am paying it off now. Is it a major problem in ch.13?

Thanks in advance.

[justbroke]

a) I have a credit card in my wife's name and I am an authorized user. We have been using this card for almost 2 years mainly... Why do I need to like this as my wife is the primary user?

Just to make sure that your BK doesn't "affect" the card in any minute manner. While it wouldn't get canceled, it could cause reporting issues on your creditor report. Don't think of it as a "statement" and ownership issue. Just think of it as a "notification" issue.

b)As my wife is not working, I show one of my expense is to pay this credit card every month. Can trustee/creditor ask this question of why do I need to take care of her expense when I am not showing any income?

Yep! I would. I mean, you want to back out "her" expenses, but if only you are working, and you are paying all the bills... they are your expenses.

c) I applied for Kohl's store credit card last month and I made few small purchases and I am paying it off now. Is it a major problem in ch.13?

Kohl's is a secured card. You'd need to list it as secured debt. You would have to pay it off in the 5 months of the plan. Unless this is really small, I don't see your overall payment being "small" for your Chapter 13.

[smkrishna]

Thanks Justbroke for a prompt response.
I would really appreciate if you can answer these questions:

Just to make sure that your BK doesn't "affect" the card in any minute manner. While it wouldn't get canceled, it could cause reporting issues on your creditor report. Don't think of it as a "statement" and ownership issue. Just think of it as a "notification" issue.

It means that I can simply use this card as my wife is the main user. "Notification" means Trustee/lender can be notified and they ask how is this card used/paid and why am I an authorized user?

Yep! I would. I mean, you want to back out "her" expenses, but if only you are working, and you are paying all the bills... they are your expenses.

She can pay off the balance from her bank account. Until today, I have been paying payment for this card. Will it create any issue if I dont show this as expense in Ch.13 earning/expense statement? I heard from my attorney the Trustee dont ask bank statement normally in Broward county, South florida? Is it normal not to ask for bank statements in other places?

Kohl's is a secured card. You'd need to list it as secured debt. You would have to pay it off in the 5 months of the plan. Unless this is really small, I don't see your overall payment being "small" for your Chapter 13.

No..it's all small amount. So, I will be paying off (max. of $50 or $70) this credit card so I dont want to include this into my plan at all. I think it's better stop using this card, isn't it?

[justbroke]

It means that I can simply use this card as my wife is the main user. "Notification" means Trustee/lender can be notified and they ask how is this card used/paid and why am I an authorized user?

No, notification means that when you file, most of your credit card companies are automatically notified of the filing, even if you don't "list" or include them in your BK.

She can pay off the balance from her bank account. Until today, I have been paying payment for this card. Will it create any issue if I dont show this as expense in Ch.13 earning/expense statement? I heard from my attorney the Trustee dont ask bank statement normally in Broward county, South florida? Is it normal not to ask for bank statements in other places?

I'm in Florida too, and I haven't been asked for a bank statement. It just depends. Your only issue, I think, is if you are paying her bills and she has no income, the Trustee may complain.

No..it's all small amount. So, I will be paying off (max. of $50 or $70) this credit card so I dont want to include this into my plan at all. I think it's better stop using this card, isn't it?

Doesn't matter if you include it or not. It's toast and since you're in a Chapter 13, you shouldn't have that card. You should definitely STOP using it.

[smkrishna]

Thanks Justbroke.
You made it clear for me. Correct me if I am wrong.

What do they give preference to look at first? The income/expense statement that we show it to them or the C.Card statement? The reason for this question is because it looks like I need to use my debit card from now onwards and that can be shown as tallying with income/expense statment. If I still keep using my wife's c.card, then that would bascially complicate the issue. So, I will remove my name from my wife's c.card and that would make everything simple.

[justbroke]

What do they give preference to look at first? The income/expense statement that we show it to them or the C.Card statement?

Generally, "they" don't look at your credit card statements unless they see a pattern of abuse. I have never been asked for a Statement when I was in a Chapter 13.

To tell you the untold truth, Chapter 13s are treated different than a Chapter 7 when it comes to assets and money in the bank. They figure that a Chapter 13 has the potential of paying back creditors, so creditors tend to not complain. You may not even be asked about bank statements, but that's Trustee dependent.

Remember, a Chapter 13 is a "Wage Earner's" plan and is also known as the Reorganization chapter. Now, I personally would stop spending on the wife's card. Try living on a budget and using your debit card. You're going to need to learn this budgeting thing anyhow, so why not start now!

[smkrishna]

I got the point. You are right!! It's better to start living within budget from now so that I don't get caught into debt trap again in my life..I totally agree with you on this.

The only thing that I am scared is in my case, she has a considerable amount in her bank. She got $3k in interest last year and that's shown in tax return as we are filing jointly. She took money out of 0% APR Balance Transfer credit cards and got that interest that she used and paid back Balance Transferred amount last year itself. My name is not in that bank a/c. Will this interest be a problem for my Ch.13?