Creditor filing a lawsuit against you

[NotFun]

Has anyone ever heard of this?

Someone was telling me that several of there creditors tried to file lawsuits against them, saying that they misrepresented themselves on the credit application to obtain the credit card or loan.

This happened once they filed for bankruptcy.

Anyone heard of this?

[keepmine]

It happens but, it's pretty rare.

[HHM]

Yes, if a debtor makes misrepresentations on the credit application, that can be grounds for having the debt declared non-dischargeable.

But, as keepmine points out, that suit is quite rare. If the suit happens at all, it is usually as a result of credit taken out within a year of filing BK. If the loan or credit was obtained more than a year ago, creditors typically don't bother to check the application because their is nothing in the BK petition that references anything more than a year prior to filing, so the creditor has nothing to go on.

[CATCHMEIFYOUCAN]

The creditor will have to prove with the original application/loan document. Most don't even have the original signed application.

Best Wishes, Catchmeifyoucan

[inhocknow]

Hello. This is very interesting.
Here is a scenario. What if that individual obtained credit 3 years ago but 10 months ago, he or she charged upsay $15,000.

If the person files for bankruptcy now, how will they treat that $15,000?

[NotFun]

Yes, if a debtor makes misrepresentations on the credit application, that can be grounds for having the debt declared non-dischargeable.

But, as keepmine points out, that suit is quite rare. If the suit happens at all, it is usually as a result of credit taken out within a year of filing BK. If the loan or credit was obtained more than a year ago, creditors typically don't bother to check the application because their is nothing in the BK petition that references anything more than a year prior to filing, so the creditor has nothing to go on.

can you elibarate on the "if the loan or credit was obtained more than a year ago"??

So are you saying if I took a loan out say six months ago, they would have a case to sue me?

But If I took the loan out say 18 months ago, they really dont have a case?

[lrprn]

Hello. This is very interesting.
Here is a scenario. What if that individual obtained credit 3 years ago but 10 months ago, he or she charged upsay $15,000.

If the person files for bankruptcy now, how will they treat that $15,000?

Depends on what the $15K was for. Paying for an emergency medical procedure that they wouldn't perform without prior payment might slide by. $15K for an expensive vacation, gambling, artwork within a year of filing....a lot less likely.

[leo_075]

I would like to add a question to that. My husband got a line of credit for 10,000 about 2 months ago and at the time of aquiring it, he was eligible for bonuses that could have potentially allowed him to earn close to 50k a year. So that's what he put on the app with the wages that I was making at the time as well. He was laid off and now that we've moved out of state neither of us are making even close to that with the temporary situation we are in trying to avoid bankruptcy (which isn't working as planned). Can they come back with something that new and sue us for that? It is only about 2 months old. According to the pay stubs at that time, it wouldn't indicate that he was making that much. Before getting laid off, it would have been that in the near future. Thanks for any input.

[keepmine]

Well, if he was eligible for the bonus based on what you kmew at the time, I don't see how that is fraudulent. The layoff shortly afterwards was beyond his control.
Having said that, $10K and a bk a few months later will raise some eyebrows. This is one where I'd delay filing as long as possible.

[NotFun]

Well if that would raise eyebrows, how far does the trustees look back?

I mean LEO 75 brings up a great point.

I'm kind of in the same boat, when I got most of my credit I was making 150k a year. And now I might break 60k. So big difference...

[keepmine]

Your issue won't be with the trustee but, with the creditors. They will be the ones who have to file the objections.
Here's how my lawyer explained it. He said objections are rare but in his experience, he'd never lost one when there was at least 6 months between filing and last credit card usage. Once it got to a year or more, he'd never had a client have an objection to discharge filed against them.

Again, if what you placed on your credit application was true at the time, it's not fraud. You are not responsible for layoffs and downsizing that happened after you applied for credit.

[leo_075]

We haven't actually used the entire 10k, just 4k of it to consolidate some cc at a lower rate. But we are literally out of money. I haven't been able to find a job that makes enough to pay our minimum and between my job and my husbands, we're barely scraping by again.....so if we wait too much longer to consult a lawyer, we're going to be so far behind payments, they may start garnishing wages. So far we're only late on 2 out of 10 lines of credit.....bad, I know. We've lived off cc's for about 6 months now using our paychecks for mortgage and utilities and cc's for food, gas and clothing thinkng that my husbands job would eventually get enough money that we would later on be able to pay them off with my job as well. So basically, we're just freaking out a little on what's going to happen with all of this. You all are great on this board, lot's of great answers to questions....

[leo_075]

How would they prove whether or not he was eligible for bonuses at that time? It's not reflected on pay checks that were given at the time because bonuses hadn't started yet and they were given out in the form of visa gift cards when they were getting bonuses.

[keepmine]

We haven't actually used the entire 10k, just 4k of it to consolidate some cc at a lower rate. But we are literally out of money. I haven't been able to find a job that makes enough to pay our minimum and between my job and my husbands, we're barely scraping by again.....so if we wait too much longer to consult a lawyer, we're going to be so far behind payments, they may start garnishing wages. So far we're only late on 2 out of 10 lines of credit.....bad, I know. We've lived off cc's for about 6 months now using our paychecks for mortgage and utilities and cc's for food, gas and clothing thinkng that my husbands job would eventually get enough money that we would later on be able to pay them off with my job as well. So basically, we're just freaking out a little on what's going to happen with all of this. You all are great on this board, lot's of great answers to questions....

I'm gonna be brutally honest here. If you can't support yourself post bk, then the whole execrise is meaningless.
You need to stop using credit. Stop paying your unsecured debt and use that money for living expenses. If that's not enough, you and/or your husband need to find pt jobs to supplement your income.
Stop worrying about a creditor objection. They can't object just because they feel like. They must have a valid reason and proof.
Your real problem right now is not what a creditor may or may not do. Your problem is, you need to increase your income.

[leo_075]

I agree....the main reason we've been using our credit is as I mentioned before, we were banking on our jobs before layoffs to pay back the credit and didn't want the late pmts. We were just waiting for the right moment to stop paying them....probably now a good time to start.