When to balance transfers raise a red flag?

[RickInMich]

JollyGG,

You are right. That 2-week loan from my brother IS a problem. I did see an attorney this past Thursday, and he said that is going to be a problem. I didn't go into it in this thread, but what occurred was I borrowed that $3,000 just until things cleared on Chase. BUT another problem with all this is I had let my brother take over payments on a truck loan about 2 years ago, and there was around $2,000 still owing. So instead of paying him back the $3,000, I paid that truck off and then paid him $1,000. Isn't that a mess? To make matters worse, we never transferred the title, so at this point it looks like I own the truck -- well, actually, I guess I do since I have the title.

So I'm left with showing I own that truck valued at $6,500, and it looks like I paid my brother back $3,000. The attorney said most likely the trustee would "sue" or demand, I'm not sure of the verbiage, my brother to get that money back. But talking to my brother, we're willing to just pay the trustee the $3,000. We'll just split the loss, so to speak.

By the way, initially I had thought of just not mentioning that whole transaction. Simply deal with the fact that it shows I own the truck. I was thinking how would there be any proof of that 2-week loan of $3,000. But the attorney said I have to swear under oath that there were no personal loans paid back. I give him credit for that. I guess I was thinking of "forgetting" it.

Rick

[Bandit]

JollyGG,

You are right. That 2-week loan from my brother IS a problem. I did see an attorney this past Thursday, and he said that is going to be a problem. I didn't go into it in this thread, but what occurred was I borrowed that $3,000 just until things cleared on Chase. BUT another problem with all this is I had let my brother take over payments on a truck loan about 2 years ago, and there was around $2,000 still owing. So instead of paying him back the $3,000, I paid that truck off and then paid him $1,000. Isn't that a mess? To make matters worse, we never transferred the title, so at this point it looks like I own the truck -- well, actually, I guess I do since I have the title.


Rick

I did this almost exact same thing. My cousin payed 2,000 on my hopsital visit as a down payment. Then I went and took a loan for that exact amount and paid the 2,000 back to him. I am not worried about it at all though because his name and account he used to pay my bill is on the reciept from the hospital and I put those numbers on the courtesy check and my personal check.

If you can show exactly where the funds went then I am not too concerned about objections because the 2,000 would have gone to the hospital any way.
It looks like a mess if the people do not know what happened but if you can show and explain what happened proving that you are not hiding the money in a treasure chest what are they going to do? I did not keep that money for nothing. It went right back to the person who paid my bill...I know they do not like that kind of stuff and it does look like a mess... but in reality and the truth is... I paid the downpayment for the hospital and surgery.

But I am thinking if you go and transfer the title at this point that could be a problem even though I know what you are saying is exactly what family members normally do or what people naturally do when finishing a sale. BK has some funny things about it as it seems they think everyone would be hiding money or assets.

From my own personal opinion, the guy who is trying to get loans at a lower rate is trying to make it so he can pay it back where as the guy who swipes the card for everything and could care less about the interest he would have to pay back. To me the person with the lower interest is being more honest because he is trying to pay it back where as the high interest charges could care less. Why the banks do not see it that way I do not understand, but they don't. The bank prefers swiping.

There are two different ways to do it but they do not like people taking the cash advances & balance transfers and would prefer you to swipe the card. WHY? because you pay a higher interest rate and that sucks up your line of credit very fast plus the money is transfered to the exact place it is supposed to go without going through your hands. I think of terms of lower interst rate to pay back and they think in terms of higher interst to pay back.

If you can explain what happened and make it clear showing a paper trail of where the funds went, then they will know you did not stash money. This is not advice or anything but I am going through a similiar situation and I am not too worried about it.
Then again I have no idea when I can actually get the hosptial bill off my back so I just keep sending 50.00 every month. So far that is working out ok. The only reason it is not in collections is because I have talked with them and negotiated what I can pay back. Of course I would be paying 50.00 a month for the next 50 years so that is not going to work either. Talk about a mess.

I see exactly what the attorny means about swearing under oath that it was not a personal loan paid back. They would probably ask me the same thing. Your situation is kind of odd though because it does appear like you paid back a personal loan even though it was for the truck. The only thing I can think of is because the bank does not have control over the money and the truck as in a secured loan. What you did is exactly the way I would have done it as well. Explaining that and proving it is going to be the difficult part.

Letting time pass is probably the best option. Since I really have no choice due to ongoing medical problems that is easy for me to say, maybe not so easy for someone else.

[B12]

I am still confused and worried about balance transfers also. Did a lot of shuffling with the 0% transfers.

I also paid back a $30,000 loan to a family member a little over a year ago.

If the lawyer only sees the last 6 months of statements, how would they find out about the large payment to the family member? Does the trustee ask to see more bank statements?

Also, I have same question on preferential payments. Can I keep paying the AMX with a payment of 400 per month and not the other creditors?

Maybe a moderator can chime in here on these two questions?

[lrprn]

I also paid back a $30,000 loan to a family member a little over a year ago.

Did you take a loan from a non-secured creditor (like a cc advance) to pay this? Or did you take out a secured loan like a HELOC?

If the lawyer only sees the last 6 months of statements, how would they find out about the large payment to the family member? Does the trustee ask to see more bank statements?

You should tell your lawyer everything about your finances. That's what you are paying him/her for. They can't protect you with their knowledge if they don't know to expect a problem.

Trustees ask for extra bank statements if they see something suspicious in your forms and dollar amounts. This happens very rarely.

Can I keep paying the AMX with a payment of 400 per month and not the other creditors?

If AMX is American Express, then since they are a non-secured creditor, if you pay them more than $600 total in the 90 days before you file, then your trustee can consider that a preferential payment and ask AmEx to send that money back to distribute to your other creditors. This doesn't impact you in any way - it's between your trustee and AmEx.

Hope this helps!

[dscurlock]

I just wanted to point out that I met with my attorney yesterday, and he seemed a little concerned about the balance transfers. I transferred a large balance from MBNA/BoA to Capital One back in February. The "loan" was for $25,000, which I paid like $23,000 to MBNA/BoA and used $2,000 just to keep current on other debt. That's the one he was most concerned about. I have made consistent payments, but only 6 so far. I definitely have the paper trail showing I transferred form that MBNA/BoA to Captial One, but the attorney didn't seem to think that would help. It was his feeling that there was like a 25% chance that Capital One would sue me for recovery on that debt.

I've decided I'm going to pay at least Sept and Oct, which would make it 8 payments, maybe Nov and Dec, too. I know it's sort of like throwing money away, but I really don't want to be stuck paying off a large part of that $25,000. The attorney said maybe they'd settle for 60% of the balance. But that'll be close to $14,000. I might as well go for the Chap 13 in that case. That's why I think making a few more payments will help lessen that chance.

Rick

are you sure you did not talk to someone from one of those companies, lower your debt...settle for 60% if you are going to file BK, I would surely go with chap 7 if you can legally file chap7 then there would be not settlement as you would not have to repay the debt....

[dscurlock]

I am still confused and worried about balance transfers also. Did a lot of shuffling with the 0% transfers.

I also paid back a $30,000 loan to a family member a little over a year ago.

If the lawyer only sees the last 6 months of statements, how would they find out about the large payment to the family member? Does the trustee ask to see more bank statements?

Also, I have same question on preferential payments. Can I keep paying the AMX with a payment of 400 per month and not the other creditors?

Maybe a moderator can chime in here on these two questions?

he does not have to include AMX in BK if he does not want to and keep making payments.

[B12]

Thank you Irprn. The confusion about the preferential payments is finally clear to me. It's a TOTAL of 600. in the 3 months, not a monthly payment! Somehow I missed that in other threads.

On the other issue, I did not borrow the 30,000. I had sold a property and paid it out of my proceeds of the sale. I sold two properties at the time. My concern is that the trustee will see the amounts of cash I have gone through and still be 90,000 in cc debt. I have not had any income in 5 years except the proceeds from the sale of investment properties, using this money and cc's to support myself and paying the overhead of the business. I guess I am concerned that I will look big time dumb and irresponsible nursing a business that has not shown a
profit in 5 years.

I met with my accountant today and told him about the chap7.
He agrees that a chap7 is a good idea for me and went into a spiel about America being a country of second chances and that the BK law is about second chances.

He also said, and I agree, that at my age, 56, a BK will probably not have any negative ramifications. I will be giving my lawyer my last 4 tax returns which will divulge all my info so he will know everything.

The double edged sword is, that next year this business that I nursed will be turning a profit.

Anyway, the 30 grand was not borrowed. My worry is that the trustee will ask for 2 years of bank statements and be privvy to all that the lawyer knows. My case is probably a cut and dry 7, but I am in the worry, worry, worry stage right now, the time just before seeing the lawyer for the first time.

Any insight the moderators or other knowledgeable people have will greatly assuage my fears.

[lrprn]

he does not have to include AMX in BK if he does not want to and keep making payments.

Unless the AmEx credit card balance is at zero when he files, the card MUST be included in the bankruptcy because ALL debts must be included. You don't get to pick and choose which debts to include or leave out.

Dscurlock, I don't know where you are getting your information, but you need to do some more studying. You can read about how Ch 7 works here - http://www.uscourts.gov/bankruptcyco.../chapter7.html

According to the US Bankruptcy Court at this site...
"In order to complete the Official Bankruptcy Forms that make up the petition, statement of financial affairs, and schedules, the debtor must provide the following information:

1. A list of all creditors and the amount and nature of their claims;
2. The source, amount, and frequency of the debtor's income;
3. A list of all of the debtor's property; and
4. A detailed list of the debtor's monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc."

It doesn't say "A list of SOME creditors...."

[B12]

Misunderstanding there, I am including the amex, just wanted to make another payment before I file, that is why I asked about paying one creditor and not the other.

[PaKettle]

Misunderstanding there, I am including the amex, just wanted to make another payment before I file, that is why I asked about paying one creditor and not the other.

No, lrpn was referring to the post by dscurlock who said one does not have to include Amex in the bankruptcy. One has to include ALL creditors who are owed money, in the Ch. 7 bankruptcy. If there is nothing owed then they don't have to be listed.

I might add an addendum, here, though, that Amex will not allow one to keep credit with them even if one does not list them in the bankruptcy due to a zero balance. Amex HATES bankruptcy filers (or so it seems) and they will cut off your credit as soon as they find out you are filing.