What is acceptable uses for cash advances?

[PaKettle]

An attorney I'm having a consultation with said he wanted to "delve into my debt", and said our debt of $84k was very high for my wife and I's combined salary of $42k. (It was $49k 2 years ago, so this is part of the problem!)

Anyway, he said he wants to make sure the Trustee might not reject the case so he wants to delve into why and when I borrowed or spent so much.

So my question is, what does it matter? Is this a common thing for an attorney to want to do?

I was under the impression that as long as you got offers in the mail and signed them, and had intention of paying them back, which I did, that you could burn the money for firewood if you want, as long as you made payments on it in good faith.

So why is it the attorney's business what I did with the money? Is he going to judge me as to whether I'm the kind of guy he wants to represent, or ??? I dont' get it.

The truth is, I took out a $22k loan 3 years ago to make a down payment on property but we didn't buy any, the money sat in the bank and we used it to live on, vacations etc.. My wife also gave some of the money to her family for medical problems. We gambled some of it. We also took out some balance transfers or cash advances just because they were low interest and we wanted to have money in the bank because my job looked shakey at the time. I figured I'd be able to get a new job but it might take a while so we might need the money. Fact is I didn't lose the job, and that money just dwindled away. Then some of it went for dental bills.

I suppose an attorney might be afraid that we socked money away in the bank or in a shoe box, but the fact is we are having trouble coming up with the money to file bankruptcy! If I had some money socked away in a sock, I'd pull it out now and pay the best attorney I could find and use him instead of looking for a cheaper one!

So the question I am asking is, are some reasons for borrowing money not acceptable? Creditors send you offers in the mail asking you to please sign on the line and use the money for vacations or whatever. So we did that. What makes the difference where we spent the money? If money used for gambling is acceptable, as it seems to be, then what would be NOT acceptable??

Isn't the new "Bankruptcy Reform" law in part designed to make it more black and white, either you fit within the numbers or you don't? Or is it indeed a moral judgment as to why you borrowed the money and what you spent it on? This guy was saying that the Trustee might question why we borrowed so much on our income and where the money went! The fact is, we just borrowed it and we just spent it. Period. End of story. No?

[aa06a47]

Depends alot on how old the debt is. I think he is just preparing himself for questions on what happened to all that money. Just be truthful. Your debt load is double your income, (my debt was almost double my income). Shouldn't be a problem as far as the court is concerned, I think he is looking to make sure you didn't just recently take out a large amount of debt and stashing it in the bed sheets for a rainey day.

[B12]

Lordy, mine is triple my income.

[PaKettle]

[snip] I think he is looking to make sure you didn't just recently take out a large amount of debt and stashing it in the bed sheets for a rainey day.

Who would ask him, the Trustee? The other attorney I talked to said he doesn't even go to the Trustee meeting sometimes... so when would he be asked?

[JRScott]

At the 341 meeting the lawyer is asked if he filled out the paperwork. He then asked him if the paperwork was correct.

Then the Trustee questioned me about reviewing the paperwork.

As you can see on the forums we have had several members who have had the US Trustee raise objections (which were later removed). Your lawyer is probably just preparing for any such objection that might occur. If you gambled it away, say so. If you sued it to live on or pay bills say so.

He's probably just being cautious.

(Incidentally I owed almost twice my yearly income too, I had no troubles)

Most legitimate expenses are considered to be car repairs, home repairs, rent, taxes, food, clothing, mortgage/rent, household items, haircuts/salons, car insurance, home insurance, medical insurance, medical expenses, etc. Just keep receipts for where your spending it if you can . If you don't have receipts if you know where you spent it you can go to them and ask for a copy of the receipt, most places offer that service.

[Misha707]

I also had debts equal to more than twice my income, and a large cash advance (the first I'd ever taken) from the end of March when I filed in July. I expected to have to explain that the high debt was because I *was* married to a man who made about 90,000/yr before he lost his job because of his drinking, and that I took the cash advance to leave him when he got abusive. My low income is because I was a stay-at-home mom for years before I was forced to get a job to support myself and my kids.

I almost wanted them to challenge it, I don't know why, but the trustee(s) have never batted an eye. yet.

However, if they *had* asked, my lawyer was well prepared to defend me, because he knew all the facts.

[SinkingFast]

The attny wants to prep himself for questions from the Local Trustee, the UST's Office, and your Creditors.

If you took a large cash advance shortly before filing, the UST's Office could investigate your Case more closely, or a Creditor could file an Objection.

Juggling money from one Creditor to another or paying bills with Cash Advance checks is pretty normal for people having trouble making ends meet. Taking a large cash advance to take a lavish vacation or buy expensive jewelry is abuse.

The attny just wants to be sure he knows what he's dealing with so he can cover your butt.

[ad_25]

To add to this question, what if you're recently taking out cash advances off credit cards to live off of in between jobs, but plan to file within the next 30-60 days? Will this be allowed or will a lawyer tell us to file after the 90 day period?

[Boscoe]

The best way to avoid objections from creditors in this case is to wait 90 days after the last cash advance and to make a couple of minimum payments.

Otherwise, the creditor may object, saying that you had no intention of repaying the debt. Not that they definitely will object, but it is more likely than if you wait 90 and make a couple of minimum payments. It's called 'good faith'.

[PaKettle]

[snip]Taking a large cash advance to take a lavish vacation or buy expensive jewelry is abuse.

This is what confuses me. Why is gambling not abuse, as seems evident from the gamblers here who got their discharges, vs. using the money for jewelry or lavish vacations? This is not what happened in my case, but I'm trying to underdstand the difference...

And when the creditors send you blank checks that say "Sign here and use this money for vacations or whatever you want, at 7% interest!", how is doing so, abuse? if you planned to pay it back?

I'm not arguing with you, just trying to understand how the Trustees and creditors think, as to what is abuse and what isn't.

Most of what I have read here seems to indicate that debt plus time = not abuse, no matter what it is. Is that pretty much the formula?

[lrprn]

This is what confuses me. Why is gambling not abuse, as seems evident from the gamblers here who got their discharges, vs. using the money for jewelry or lavish vacations?

The way I understand it, gambling and drug use are both real psychological addictions that are recognized by the American Psychological Association as valid mental health diagnoses - in other words, the pros say you couldn't help yourself so it's very difficult for creditors to say that you were in control of yourself and deliberately took the money knowing you weren't going to pay it back.

There are no APA diagnoses for taking lavish vacations or buying expensive jewelry, so this is an easier abuse for creditors to prove because you have no real defense against it.

And when the creditors send you blank checks that say "Sign here and use this money for vacations or whatever you want, at 7% interest!", how is doing so, abuse? if you planned to pay it back?

It just depends on the creditor and the circumstances. What one creditor might let go by, another won't. The more time that passes between the event and filing, the better for you because it makes the creditor's job of proving you did take the money without intending to pay it back much harder.

Most of what I have read here seems to indicate that debt plus time = not abuse, no matter what it is. Is that pretty much the formula?

That's a good way to look at it for 99% of the typical recent debt situations we see here in the forum.

The law does define some specific time frames - 90 days for credit card use, more than a year for asset transfers, etc.

But the bottom line is that it all depends on whether a creditor thinks they can prove to a bankruptcy judge that you didn't intend to pay their money back when you took it.

[PaKettle]

Thanks, lrpn, that clarifies it a lot.

My original tack was that I should basically say I did other things with the money instead of the gambling I really did, because I had heard somewhere that gambling was questionable as a reason for spending borrowed money, and I didn't want to get off on a "wrong" path.

But what I am seeing here on this board is that the opposite is true and gambling is a better reason for spending borrowed money than just spending it on "stuff" or vacations etc.

However, I have very little proof that I gambled the money. I took it out in cash, drove to Vegas, and spent it. No paper trail other than sometimes hotel bills for the room we stayed in. But no direct proof of gambling losses, and I made no wins that I had to report.

I really don't see why this should even be an issue since none of it occurred in the past 6 months and most of it occurred like 2-3 years ago before I stopped gambling because I realized - with help from friends and family - that it was a lose-lose situation! But the attorney I talked to on the phone last week (I have an official consultation with him next week), said he wants to "delve into" my debt, and so I have been nervous as to whether I should tell him I gambled away $20-30k of the $80k total, or whether I should tell him we "just spent it".

None of the other attorneys inquired how I spent the money, and I really don' t see why it should even matter since it WAS over a year ago (some were 3 years ago) and I made timely payments on it since then. But if he wants to know, I guess I can tell him.

[CindyLou]

Hi Pakettle,
I am sorry to hear about your gambling problem. But you know what? During this bankruptcy process if you can remember one thing that will get you through it it is this. Just be honest. The facts are the facts. One person that should always know the whole story is your attorney. You could get into a real pickle if you don't tell your attorney the facts. You are going to fine!! You are on the right track here. Maybe Catchmeifyoucan could offer some words of enouragement if you PM about his gambling debts. I wish you luck in your search of an attorney and cannot stress enough the importance of FULL DISCLOSURE to one's attorney!!!

[danaf]

you say these gambling debts are 2-3 yrs old. there are people on here worrying about using their cards less than 3 months ago or drawing cash advances recently. i wish my own debts were that old.

i guess it doesn't hurt to be honest with your lawyer but to be honest not one lawyer I've had a consultation with has asked such a question. and to be honest, I'm not so sure I would divulge such information since really, it is old.

i'm not telling you to be dishonest but i am saying i don't blame you to question why a lawyer would go into such detail on a ch 7, no asset. it seems like overkill. and if it were me, I'd be very skeptible. personally, i'd choose a different lawyer.

[PaKettle]

you say these gambling debts are 2-3 yrs old. there are people on here worrying about using their cards less than 3 months ago or drawing cash advances recently. i wish my own debts were that old.

i guess it doesn't hurt to be honest with your lawyer but to be honest not one lawyer I've had a consultation with has asked such a question. and to be honest, I'm not so sure I would divulge such information since really, it is old.

i'm not telling you to be dishonest but i am saying i don't blame you to question why a lawyer would go into such detail on a ch 7, no asset. it seems like overkill. and if it were me, I'd be very skeptible. personally, i'd choose a different lawyer.

Yes, I agree 100% I felt as if this guy were secretly working for the Trustee, trying to find info to use against me! I doubt that is really true, but that's the "vibe" I got from the guy. He just made me feel very nervous, as if I was a criminal or something!

I cancelled the appointment with him, today. At first, I was going to go, just to see what he had to say. But then, I thought, "Why put myself through this? The guy clearly makes me feel nervous and I don't fully trust him, so why put myself through an interview with him?" So I cancelled. He's probably a perfectly good attorney, and was just wanting to be careful, as he said ("I'm more conservative than other attorneys", he told me). But the thing is, I don't really WANT a "more conservative" attorney, I want a guy who makes me feel at ease and confident that he is going to get me through this!