cash advances more recent than I thought!

[PaKettle]

Well, I was doing some accounting of our debt last night and I just realized that we took 2 balance transfer/cash advances (where you just sign the unsolicited check they send you in the mail and deposit it into your checking account) from my wife's credit cards, for a total of $10k, at the end of March!

Worse, both accounts are from the same creditor, (though 2 different cards).

Worse, I thought we had made payments from March through August, but in reality it appears we only made payments in April and May on each of the 2 credit cards.

So I am afraid this is going to look very bad. It's barely at the 6 month mark, but $10k from the same bank, and only 2 payments on them.

What did we use the money for? Some was used for dental for my wife, some was used for 2 vacations we went on in June, and maybe some was used to make payments on other accounts. I don't even have the bank statements to see what happened to the transfer money, because we closed that account a few months ago due to them raising their monthly checking fee from 0 to $5.

So, my question is, is this something I should call my attorney and tell him about (we are planning to file in 2 weeks), or is it just something there is nothing anyone can do anything about and no reason to tell him?

This raises another question I have about the 341: Does one's attorney offer anything in the way of Defense, if, say, a creditor raises an objection to the transfer or how it was spent? Or are you just on your own to answer the questions and the attorney is just observing? If that's the case, then what DOES the attorney do at the 341 meeting?

Dang! Every time I start to calm down about how the 341 meeting is likely to go, I find something new to worry about! I would hate to have to pay back this $10k of debt! And worse, I'd hate for this to cause the trustee to ask about where other transfers went, as some went for gambling and our attorney said he hoped we didn't have to answer questions about that!

And someone said on here, earlier, that using transfers for vacations doesn't look good, either. Though, I don't understand that, because right on the checks they send you in the mail, it says "Use for vacations! Use for anything you want!" So we did.

We had every intention of continuing to pay them back, though, until things kind of went awry in July/August.

[HHM]

Call your attorney about the cash advances.

As for the 341 meeting, the 341 meeting is a DEPOSITION not a hearing. It is merely a question and answer session, so there is nothing for your attorney to defend, per se.

Frankly, there is NOTHING for your attorney to do at a 341 meeting. If the creditor actually files an objection, then there is a hearing before the BK judge, and that is where you attorney can try to defend you (assuming, of course, you have the money to pay your attorney to defend you).

The reasons vacations don't look good is because they are discretionary, luxury expenses. Ask yourself, if someone is in financial trouble, can that person really afford a vacation (i.e. have the intent to pay back the debt they incurred to take the vacation)

[familyof7]

But I have been told that the 90 day rule is the one to go by.? If you have waited almost 6 months it is double that amount of time and the creditor can only object for good cause not because they want to and the main thing is that the burden of proof is on them they have to proove that you had NO INTENTION of paying them back and you did pay on it for 2 months (yes that is nothing compared to the amount) but you had intention on paying it back and you fell on hard times and could not pay anyone back. At the time you took it you used it for dental, and Vacation but so what at the time you had every intention to pay it back. I would tell your attorney and of course do as he suggest but I dont think it is going to matter.

[PaKettle]

Call your attorney about the cash advances.

As for the 341 meeting, the 341 meeting is a DEPOSITION not a hearing. It is merely a question and answer session, so there is nothing for your attorney to defend, per se.

Frankly, there is NOTHING for your attorney to do at a 341 meeting. If the creditor actually files an objection, then there is a hearing before the BK judge, and that is where you attorney can try to defend you (assuming, of course, you have the money to pay your attorney to defend you).

The reasons vacations don't look good is because they are discretionary, luxury expenses. Ask yourself, if someone is in financial trouble, can that person really afford a vacation (i.e. have the intent to pay back the debt they incurred to take the vacation)

Thanks for clarifying about the 341 meeting, HHM.

I can see your point, but in our case we were not aware we were in financial trouble at the time we took the vacations. Believe it or not (THAT's the problem: will the trustee see the truth of this?) we did not feel we were in financial hot water in March. We were paying our bills just fine even though money was tight. We were getting by. Nothing really "happened" other than my wife losing her unemployment benefits and my work being a little slower (less days = less pay) than normal. Part of it, too, was that the balance transfers in our bank account made it "Seem like" we had more money than we did. I'm sure this happens to a lot of people!

Farmilyof7, I hope you are right, that since it is 6 months back and we DID make 2 payments, it isn't that bad. But for some reason my attorney said something the day I paid him that made it sound like transfers THIS YEAR were a problem, not just in the past 3 months. He does a lot of bankruptcies, so he must know that some of the trustees are coming down on the side of the creditors on these.

Personally, I feel that when they send you unsolicited checks in the mail, urging you to sign them and put the money in your bank account, to do with as you please ("vacations" are even mentioned), I don't see how they can then turn around and say "Well, you shouldn't have taken the transfer!" Granted, I am ultimately responsible and yes, it was not the best thing to do, in hindsight, but at the time, it seemed like we would be able to pay it back. I hope I am given a chance to convince the trustee of that if he raises the issue.

[PaKettle]

nevermind, thought I could upload a jpg here but I see that I cannot

[EveryDayAdam]

After 90 days, the burden of proof on whether you intended to pay them back or not. It's very difficult for them to prove that. I doubt the creditor will even raise the question with it being 6 months out.

Also the waiting period for cash advances is 60 days...not 90. 90 days is for everything else, but 60 days for cash advances.,,so at this point you'd be 3 times past the waiting period...i'd say you're fine.

[Bandit]

Personally, I feel that when they send you unsolicited checks in the mail, urging you to sign them and put the money in your bank account, to do with as you please ("vacations" are even mentioned),

This is the way I have always borrowed money from credit cards but I have always been able to pay it back before that high interest sets in. It is only recently that I have had to swipe the cards for Doctor because those checks are useless to pay Doctors & there is no way I was going to get trapped with thousands of dollars going into my account without being able to prove where it went. So I swiped the cards & it makes me sick.

Though, there is something funny about it because they DO urge people to borrow the money that way however they don't want you to actually use it for everything unless you put into your bank then write your personal check to your Doctor or to the mechanic. It is very different from a balance transfer for the same low interest where you actually pay off another loan then keep making the payment. Now I have this 5 gallon pickle bucket with all these reciepts going into it & 20 new folders for what I am paying.

They are very tricky with that stuff.

[HHM]

After 90 days, the burden of proof on whether you intended to pay them back or not. It's very difficult for them to prove that. I doubt the creditor will even raise the question with it being 6 months out.

Also the waiting period for cash advances is 60 days...not 90. 90 days is for everything else, but 60 days for cash advances.,,so at this point you'd be 3 times past the waiting period...i'd say you're fine.

Correction, the rule for cash advances is 70 days, NOT 60. The rule for charges on credit cards (for non-necessities) is 90 days.

Also, I am not saying the creditors will object. As the other members have indicated, outside the 70/90 day timeframe, the burden of proof falls on the creditor to show that you did not have a reasonable expectation to be able to pay back the debt. Unless these vacations were unreasonably expensive, I doubt a creditor would object if the charges are older than 6 months. Keep in mind the 70/90 day rule is hard coded in the BK code (under section 523, Exceptions to Discharge), the so called 6 month rule is more a rule of thumb...but I have seen creditors object to charges/cash advances as old as 9-10 months and win. But for the most part, in the typical consumer case, unsecured creditors' tend not to object to charges that are 6+ months old because it is difficult for them to prove that the debtor could not reasonably have paid back that debt.

Also, now that your in the realm of BK, you need to separate what "you think" things should be and how "things actually are"

[PaKettle]

After 90 days, the burden of proof on whether you intended to pay them back or not. It's very difficult for them to prove that. I doubt the creditor will even raise the question with it being 6 months out.

Also the waiting period for cash advances is 60 days...not 90. 90 days is for everything else, but 60 days for cash advances.,,so at this point you'd be 3 times past the waiting period...i'd say you're fine.

Thanks for your feedback, you make me feel a little better.

The only thing is, it seems that although the law says the burden of proof is on them and so on, it SEEMS to me (I don't really know; but based on what I read here and some attorneys I've spoken with), all this stuff comes down to one thing:

Is it worth their while to object?

I certainly HOPE the "burden of proof" being on them makes it difficult for them to object, but in practice, I wonder how it really works. My attorney said that basically it costs them about $3500 to object, so they won't object unless they can get enough back out of it to make it worth it. He indicated that the figure then is usually around $7k, if they can object to more than $7k it becomes worth it to them to do so, figuring they may make some money out of the deal... So my $10k would ostensibly give them enough "profit" to make it worth their while to object... But still, I don't see how they can prove anyone's intent was not to pay them back...

But the big problem is, they know they don't have to prove it, the bottom line is, they know you will settle for paying them back half rather than going to court and incurring a bunch of expenses...

It's weird, because at first my attorney said, "No problem, this will work out fine" and I felt very confident and safe. Then when I paid him, he kinda changed his tune and said, "Well, those balance transfers COULD be a problem..." (and he didn't even know about these most recent ones, as I had forgotten them)...

So I guess there is no point in worrying... I'll just have to wait and see what happens. All I know is that all this is very nerve-wracking, the not knowing, the waiting, the potential pitfalls...

"Ill have a cafe'-mocha-vodka-valium-latte to go, please!"
************************************************
UPDATE AFTER MY DISCHARGE:

No creditors objected and all went smooth.

I think the thing about objections is that most of the banks aren't going to object unless you took a LOT of money out within 1-6 months previous to filing, and didn't make any or maybe only one payment. In my case I did take out a couple of $5k balance transfers about 6 months prior to filling and only made one payment on one of those, 2 payments on the other. No one objected. I think in part this is because it simply costs the creditor too much $, time and effort to object. My attorney said that unless the amount is over $5-6k it is not really worth it to them AT ALL because they only get back half of that MINUS their cost in having an attorney deal with it. So they'd prefer to only go after the "big fish". (I'm talking about the major credit cards here, not small mom and pop furniture shops - they WILL object for little money!)

From having read this board for the past 6 months or so, before, during and after my Ch. 7, I have not heard of ONE objection being filed. Well, okay, I did hear of one or two but then never heard more so I assume they did not lead to a payment plan. In any case, it appears that objections are VERY rare and it is not worth getting all worried about them. I've seen several cases here including my own which I'd have thought there might have been an objection but there was not.

So if you can put 6 months between the cash advance or expenditure and your date of filing, I think there is little chance of an objection. In general, I think you have little to worry aobut unless you just WENT NUTS and took out $10,000 cash advances right before filing... The key is to put TIME in between your expenditures and your filing. And if you can make a payment or two before filing that will also show that you intended to pay.

Good luck!

[inhocknow]

If a creditor objects, and the cash advances were used to pay other bills such as credit cards bills, can the objecting creditor still win?

[HHM]

If a creditor objects, and the cash advances were used to pay other bills such as credit cards bills, can the objecting creditor still win?

That won't be the sole fact; but frankly, that fact is not a favorable one for you. If you are using credit to pay off "other" credit, that means you don't have enough income to meet your expenses, and therefore are insolvent and cannot payback debt you incur, ergo, you will probably lose.

Keep in mind, you're up a against lawyers' whose job it is to cast your situation in the most unfavorable light as possible...and in the cold confines of a court room, that is all the judge has to go off of in making their decision.

[JollyGG]

What our lawyer did at our 341 meeting.
Well, basically he kept us calm and helped direct us to the answers we were looking for.
Many of the trustee's questions were stuff that was in the bankruptcy petition. Such as how much did you make last year?, how much is your home worth?, ect. So our lawyer just pointed in our petition to where the answer was and we answered.
While we waited before the meeting and listed to other people answer the trustee's questions he answered our questions. For example the trustee asked everyone about preferential payments. He told us that this is where we would mention the balance transfer we did and pointed to where we had put that in the petition. He double checked with us about personal property the trustee was asking people about alot - bikes, mowers, ect and he checked that we had included those in our petition.
He brought our tax return with him and our whole file in case the trustee had asked for something.
He reasured us while we waited that ours was a simple chapter 7 and that we would be in and out of the 341 meeting in no time.
He took note of additional information the trustee asked for at the 341 and provided it later.

[JRScott]

Pa I'd let your lawyer know.

However given the situation and time that has passed as well as the fact you did make 2 payments on it it may not come up. Just prepare yourself and the lawyer in case they do object. Your lawyer might have some good ideas how to combat it if it comes up. The burden would be on the issuer though at this point to prove you meant to defraud. So it is likely they will not object.

[aa06a47]

My thought is they won't go after your particular cash advances. The total was 10k, two different people, two separate accounts. Your lawyer is preparing you for the worst.

I was chapter 13, so creditors treat those differently, but I waited 100 days. I was a bad gambler who probably had 100 cash advances in the 1 year time frame before filing.
I had even made a trip to Vegas 5 months prior to filing....never came up.

[Bandit]

What did we use the money for? Some was used for dental for my wife, some was used for 2 vacations we went on in June, and maybe some was used to make payments on other accounts. I don't even have the bank statements to see what happened to the transfer money, because we closed that account a few months ago due to them raising their monthly checking fee from 0 to $5.

Pakettle, I would not be losing any sleep over this. The only other thing I would do at this point is have the medical bills & payments in a file for those portions, if I didn't already. .

"Ill have a cafe'-mocha-vodka-valium-latte to go, please!"

My thought is they won't go after your particular cash advances. The total was 10k, two different people, two separate accounts. Your lawyer is preparing you for the worst.

My thoughts as well. After careful study of 1.4.1, that is all it is.
It's too wishy washy for them to bother.