Sticky situation, stock market losses, balance transfers, etc

[knowledge101]

I posted this as a reply to an old post but though I would make my own thread so I don't hijack it.

I know I have a sticky situation here so I will go to an attorney soon but I also know that going too early can be a problem because of how soon some of the charges have been so I would like to wait a few months.

Short story, I am young, 26, married. Have no assets, car is worth only 4k and is exempt under state law (Vermont). Only have 15k equity on my mortgage so also exempt under state law

Last year I tried to invest as a day trader in the stock market. Only had 1k and made a nice return. I had some debts I wanted to pay off and thought I could use the stock market to my advantage. Over the last year I took a lot of time to learn about day trading, options, etc, paid for analysts' guidance, etc, but in the end was not too successful. After losing some money, I stupidly decided to leverage some of my credit to help me earn more money. Yes wasn't the wisest decision I've made in my life.

Now I am on 26 and my annual income is only $24k. However my father at the time was helping me pay my debts and so I over the years reported his income to creditors with my income. I had significant credit lines because of this and my credit score has always been near 800, always paid my balances in full and on time.

That being said, after this situation my father isn't really involved with my debt anymore. Long stort short (no judgements please), I racked up nearly $137k in unsecured debt on my credit cards (through balance transfers primarily).

I did not do great and I am cutting the rabbit hole early. Yes lost pretty much all the money. Still have $50k of unsecured credit lines left but pretty much calling it quits and realize I have a problem. Also barely paying off minimum payments as it is.

That being said, nothing is in default yet, but I really want a fresh start. Yes I messed up, yes I am young, yes this is not a good situation. I would give anything for a fresh start.

I am married but my wife has perfect credit and she is not a cosigner on any of my debts (nor the home, which we want to keep as we can still pay those payments)

Will this be a sticky situation? I know creditors will not like that I basically balance transferred 130k and am not able to pay it back. But to be quite honest none of this was fraudulent and I made every effort to try and get the money back and pay it off and I have numerous documenting proofs for that including my trading activity. The problem is I used some balance transfers to pay off other cards with higher APRs so I want to make sure that won't be considered fraudelant either. Keep in mind at the time none of this was done with expectations of bankruptcy. I did not want to get to this point and did not think I would even be here right now but it is what it is. My last balance transfer was July 1st and my last card transactions were about a week ago (have not touched my card since).

I'm hoping a judge would sympathize, but I'm worried the creditors will not stand down without a fight. About 50k of the debt is with chase, 50k with citi, 20k with barclay, and the other 17k spread around with discover and other smaller banks. Most of these balance transfers occurred in the last 3-4 or so months.

Any advice would be appreciated. I might be able to pay minimum payments for another 4 or so months. I want to get away as far from the 90 day period as possible because I feel if I file now I will open up myself to more problems then its worth since some of the balance transfers were only a month ago. Please if you can give any advice let me know. If you think speaking with an attorney right now won't jeopardize my case either let me know, thanks!

My goal is to speak with an attorney in October and file in November.

Thanks for the help!

[bcohen]

My advice is to keep paying for another month or two, so that no debt has been incurred during the 90-day lookback period. After that, you can quit paying and as long as you file within 30 days of the first missed payments being due, you should be fine. Remember that the lookback period is based on when you actually file--not on how many payments, if any, were made.

[LadyInTheRed]

I think you are worrying about alot that really isn't an issue. I am not on a good device for cutting and pasting, but do a search for "bankruptcy exceptions to discharge" and you will find articles and the bankruptcy code section that covers the kind of issues you could encounter.

bcohen is right that by waiting 90 days after your last balance transfer will avoid most issues. It doesn't guaranty that a creditor won't petition to have its debt ruled non dischargeable, but if they do, they would have to prove that your charges or balance transfers were fraudulent. People play the balance transfer game tryng to stay afloat all the time. It doesn't mean they committed fraud.

Consulting with an attorney is not evidence of fraud. I suggest you start consulting with attorneys now so that you can best prepare for your filing.

[knowledge101]

Thanks. What's the likelihood the Balance Transfers will be challenged when I am outside the 90-day lookback period? I've read they can always challenge even years out but less likely to do so as they have to prove I was insolvent at the time. My "evidence" is obviously my stock trading statements showing I was actively still trying to earn back my losses and legitimately believed I could do it (as in, I was making every effort to attempt to pay back my debt). I also have many subscription fees I had paid for analysts' up until this month for trading advice/education.

The problem that worries me of course is I am unsure if this is a "valid argument" to prove I was not insolvent at the time. I understand that the judge has the final say (and maybe the trustee?) but I am just concerned that >$120k in Balance Transfers would cause a problem. I know others have said on this forum that day trading can be considered "gambling" legally speaking, but what are the outcomes of things like this?

Thank you for your advice, just stressed out and nervous about the whole thing. I just want to move on with my life at this point

[LadyInTheRed]

If you are outside of the 90 day period, it is the creditor that must prove the debt was incurred fraudulently. The question is what evidence do they have?

Even within 90 days, for the burden of proof to be on you, the debts would have to be for luxury goods and services.

If it is seen as gambling debt, I would think it is even harder to prove fraud. Bad financial decisions do not equal fraud.

The trustee would decide nothing. This is an issue between the creditor and the debtor.

I've been on this forum for almost 7 years and I don't think I have heard of any creditor filing a complaint to have a debt ruled not dischargeable.

Make some appointments with attorneys. Bring a list of the transactions you are worried about and ask their opinion. I bet they will make you feel better.

[knowledge101]

Thank you for the help!

[knowledge101]

Ok so I wanted to update this thread as it's been 5 months since I posted. I filed Ch 7 on October 28th, 2016 and cannot be more glad I did so. Feels great to have it off my shoulder (assuming I get the discharge). Met with an Attorney in late September and we waited to be outside the 90 day period. We filed and met with the Trustee in December who closed the meeting and we were a no-asset case. Mortgage reaffirmation has been filed (after much consultation on this topic) and approved. I am pending a discharge now on February 6th assuming no creditors object. So 4.5 weeks left. I'm nervous but also calm. I feel that my attorney would have been contacted by now if they wanted to demand a settlement. He is fairly confident we won't be hassled as the creditors have no evidence but of course we can't guarantee that. Of course I have a good defense even if they did file (as the money is obviously gone and the evidence is there for where it went), but the concern then would be litigation costs if I did fight it. For those that do object, I've read on different boards and here they sometimes will threaten the attorney a week before the discharge date and will file an AP (if they were going to do so) on the day before the discharge. Is this true? Still nervous but letting it play out. Almost at the end of the light...

Also I paid all minimum payments through October 28. This was a great idea as my score actually has gone up since then (now hovering in the 680-710 range across the 3 bureaus) because I had 0 late payments on my account, despite the Ch 7 being reported. Also the attorney says this will be another reason why the creditors likely would not file an AP, because I was on time up until the day of filing. Hope so!

[justbroke]

For those that do object, I've read on different boards and here they sometimes will threaten the attorney a week before the discharge date and will file an AP (if they were going to do so) on the day before the discharge. Is this true? Still nervous but letting it play out. Almost at the end of the light...

I would not worry about this potential at all. It is what it is as this point and there is no sense speculating on what may happen. The fact is, threatening does absolutely nothing. They have to actually file a complaint (adversary proceeding) within the period allowed.

Creditor complaints to determine dischareability (APs) need to prove that there was fraud or that you never intended to pay. As you already know, actually making payments on the debt shows an intent to pay. Whether or not a creditor will think about filing an AP is so fact specific that only the creditor knows.

Try to relax and breathe. I know it's easier said and done, but I'm saying it anyhow!

[knowledge101]

I would not worry about this potential at all. It is what it is as this point and there is no sense speculating on what may happen. The fact is, threatening does absolutely nothing. They have to actually file a complaint (adversary proceeding) within the period allowed.

Creditor complaints to determine dischareability (APs) need to prove that there was fraud or that you never intended to pay. As you already know, actually making payments on the debt shows an intent to pay. Whether or not a creditor will think about filing an AP is so fact specific that only the creditor knows.

Try to relax and breathe. I know it's easier said and done, but I'm saying it anyhow!

Thank you! I honestly forgot about it after the 341, but it's been haunting me the last few nights as the discharge date approaches because I would have no money to fight it and no money to settle. Thanks for the words of encouragement. I'll try not to overthink a scenario that may never happen

[knowledge101]

Per my original notice by the bankruptcy court, today was the deadline for any creditors to object to the discharge and it has gone with no PACER docket updates/filings That being said, given I am a no-asset case and my Trustee has already filed to be relieved of duties hopefully will get a discharge soon! Thank you!

[knowledge101]

Just got my discharge!

[leonel9]

Just got my discharge!

Congratulations!!!

[LadyInTheRed]

Congratulations!

[justbroke]

See... nothing to worry about!!!

Congratulations.