Consulted with attorney today--something seemed wrong.

[Phillymanhere]

hi guys,
I am making the rounds to meet various bankruptcy attorneys. Today I met a really friendly and sharp young guy whom I trusted and liked.
My situation: I have 43K in cc debt. I earn under the means test in Pennsylvania.
The question concerns an 8K cash advance on a card. I got the 8K in October 2007.
The attorney today suggested I wait a full year to be really safe in filing for chapter 7. He says I could stop paying credit cards now (I'm still current) and pay him over time and he'll file after one year from the 8K cash advance.
Here's the question: He suggested that I stop payments on all cards except for the card on which I got the 8K advance. He wants me to keep paying that card in order to show that I did intend to repay them.
Does this make sense? I've been reading about preferential payments and all. I didn't think of this until I was in the car heading back from the attorney's office. Based on the reading here, is a preferential payment something I should even care about?
Thanks ahead of time for answers.

[Dollar Bill]

You know from these boards and other lawyers I have consulted, they recommend waiting 6mos for the advances. 3 months of payments for simple charges.

Maybe he's concerned that the acct is so fresh.

After 6 mos, and you can't pay, you just can't pay.

[FreshLikeADaisy]

Phillyman, I don't think it would be within the realm of preferential payments especially if the payment amounts were themselves low (what is it we have to declare, less than $600 or something? can't remember off the top of my head, I'm sorry ). BUT, that said, I would personally stop paying them all at the same time; depending on how closely the trustee looked, that continuing payment on the one might itself tell him when you were intending to bk.

I know you like this fella, but are there 1 or 2 more with free consults you can go see? I'm not sure you're getting the whole picture from this one, if only because he seems unfamiliar with the 70/90 thing and how he advised you to proceed. (Not saying he's wrong! only saying heis advice sounds unusual to me. ) Good luck!!!

[Cali]

I also suggest seeing 2 more attorneys just to be sure the first one is the one you want.

And I can see why he told you that since the advance was so much. If the payments won't add up to 600$, you should be ok.

[lrprn]

Keep in mind that preferential payments are between the creditor and the trustee. They do not involve the filer at all.

That's why the lawyer is focusing on avoiding a creditor objection to the advance which would impact the filer significantly.

If paying one creditor and no other creditor before filing triggers a preferential payment charge from the trustee, the one creditor has to cough up what they were paid by the debtor back to the trustee, that's all. Hurts the creditor, not the filer.

[Phillymanhere]

thanks guys

I will definitely speak with some additional attorneys. Yes, I liked the guy I met with, but I'm not going to hire him just because I "liked him." I want to be sure he really knows his stuff.
Thanks
Phillyman

[danaf]

I don't think that the attorney gave you bad advice. He is wanting to make sure you have a successful ch7. If he were a bad attorney just wanting your $$$, he wouldn't have told you this. Preferential payments with unsecured creditors is a 90 day lookback I believe. And the year wait on cash advances seem to be the norm with attorneys. I had one tell me the same thing. I think as long as you make 6-7 mos payments, and then stop, and then wait it out until almost a yr, you should be ok. And probably by the time you file, you won't even have to worry about the preferential payment issue but either way, as LP said, that would not be your problem. Mind you, you will have to deal with the calls from creditors ect. The lawyer you found doesn't sound so bad to me.

[JRScott]

The lawyer is most likely being overcautious. 8k cash advance is a pretty large amount in just 6 months. It's not unusual though.

It is possible he's had another case with a similar cash advance and he knows how the trustee goes about looking at the information in his district.

It doesn't hurt to seek some other opinions and that is always good, but the fact the fella pointed this out as a possible problem area could be a good sign

I'd still go see a few more before making a decision. In fact ask each one what they think about how that would affect the bankruptcy.

[Phillymanhere]

you guys are great!

Thanks for all the responses ... I have set up two more meetings with attorneys. So far I have met two. The first seemed sharp but was quite expensive (haven't ruled her out.)
I have set up a meeting with an attorney who is a trustee here in Pennsylvania. And I set up a meeting with another guy that I had a good talk with briefly on the phone.
Thanks for the support. Makes considering this so much better.

[HHM]

That attorney's advice is pretty much on par.

I wouldn't worry about the preferential transfer issue...it is really not that big a deal. (if you don't know, a PT issue does not affect you in any way, that is an issue between the trustee and creditor). So yes, if cash is tight, you should stop paying all unsecured creditors (except the creditor with the cash advance)

$8k is a relatively significant cash advance and I would certainly recommend waiting more than 6 months. (my typical advice is that for any advance over $7,000, the debtor should wait one year before filing). The reason you need to keep paying on the cash advance is to avoid the appearance of fraud. (i.e. taking out a large sum of money with no reasonable way to pay it back)

[adaughter]

well actually my attorney also mentioned to us and asked if we had taken out any large amount of money and not paid at all as well because if you dont pay any bills that can be looked upon as fraud like why did you take out the money if you didnt intent to pay it back at all? does that make sense. so yes this sounds like he is giving you good advice

[coloradomrg]

The first seemed sharp but was quite expensive (haven't ruled her out.)

We went with probably the most expensive guy around... But he is also the head of the bar association for BK in our county, and a good guy that did some work for my father in-law. Made the whole process very smooth, he's seen it all, and knows what to do when something comes up. He was even joking around with the trustee at our 341, none of the other attys did that.

I believe that you get what you pay for, and you don't want an attorney that is on the trustees bad side. While we were waiting to be called at our 341, we saw 2 atty's get warned that if they make another (easily avoidable) mistake, that the trustee was going to dismiss their cases without warning. I couldn't imagine being the filer sitting at the table and hearing that!

[fltoo]

Also think the attorney gave you sound advice for a smooth BK. The one year is up in a few weeks so he probably figured why not wait. You have paid almost one year on the transaction, so I doubt if it will look like fraud. I would stop paying card now and file next month.

[justbroke]

Here's the question: He suggested that I stop payments on all cards except for the card on which I got the 8K advance. He wants me to keep paying that card in order to show that I did intend to repay them.
Does this make sense? I've been reading about preferential payments and all. I didn't think of this until I was in the car heading back from the attorney's office. Based on the reading here, is a preferential payment something I should even care about?

Your lawyer is smart and sounds experienced!!! That's the key that you want in a BK lawyer.

Since you have a large cash advance, the credit card company almost certainly will file an Adversary Proceeding for Fraud. That is, that you took the large cash advance, knowing that you couldn't afford to pay it back and didn't.

This is why the lawyer is having you do "pre-Bankruptcy" planning. That is to pay on that card to show that you actually intended to pay it back. After the one year, you are pretty safe from having the credit card company come after you for fraud.

You'd be very wise to follow this apparently adept Bankruptcy lawyer's instructions.

[momof5]

Have you been making payments on this cash advance since you received it?

If so, then you really dont have much to worry about. No one can predict what ones life will be like in a year... heck we couldnt predict that my husband would lose his job 3 months after we opened an Amex card and transferred $4000 and then used another $4,000 for the holidays and misc. Had they questioned it.. which they did not, easily explained.

October is only a few days away... and with a year in between the advance and your filing there is really no way to prove that you INTENDED to fraud when you took the advance. Unless you have made no payments.

One thing I was reminded about here often as I filed is that it is the Credit card companies problem to PROVE that you intended to fraud. You dont have to defend yourself unless they have substantial proof and in those cases the person probably did commit fraud.