Question on BT and how it unfolded (will trustee grill me)

[texanboy76]

Okay here is the scenario that I have at stake before I file my bk in March of next year. A friend of mine needed some help and needed a loan of 25K which he would repay in 30 days and give me an additional 7K for a total of 32K. I have an AMX Plat and AMX Gold cards which both a balance of around 3K each. I did a paypal of 13K on the Plat and a paypal of 7k on the Gold to help my buddy out. (hey i needed the 7K LOL)

I had a BT offer from Citi for 1.99% for the life of the transfer. On my citi card I had a balance of 35K with a 41K credit line. I used the 25K of the 32K my friend gave me and paid down the 35K to 10K. I then Balance Transfered my balance from Amex that had about 26K in total to the Citi card. The obvious reason for doing this was that my APR would be lower and not make my minimum higher with a rate of like 13.9% The main thing is my balance with Citi never really changed in terms of total debt other then I used it to get a better APR %

This was all done in September and I've made the payments each month to Citi. How bad does this look? When I went to my lawyers office in September I didn't mention it was a BT. I'm to meet with him Friday but was curious on what others thought? It shows a deposit into my account for the 32K and a payment to Citi for 25K.



I'm lost and probably confused everyone but I've used paypal for the majority of my cards to get cash out for gambling over the past 12 months. Yes I realize that is a problem and have worked extensively to ensure that never happens again.

[BROKENN]

Some say 90 days but could also be fraud, then the normal wait is 1 year..

And to show that much rolling around with big differences looks like income too.

[happy_ira]

70 days? 90 days? One year? Given the sums you are talking about here, I think you should put as much distance as possible between them and your filing date.

Just to play devil's advocate for a moment, put yourself in the trustee's shoes... What is your income level? Are you way above median? Does your lawyer think the US trustee will take an interest?

Even if a UST is not involved, the explanation of "I borrowed $25k for my buddy who paid me back $25k plus an add'l $7k" ... it just sounds a bit odd. While I was waiting in the room on the day of my 341, cases like this that smelled fishy... the trustee jumped all over it and hounded questions, etc. From one person who couldnt give him straight answers he really let her have it.

Does this mean you will get grilled? Maybe not. (Just mentioning the above for "worst case".) You have the benefit of planning ahead here.... so, try to put a solid year between the txfrs and the filing... and even in that case, you should still have solid reasons/answers if asked about all this.

Just my $0.02.

[texanboy76]

70 days? 90 days? One year? Given the sums you are talking about here, I think you should put as much distance as possible between them and your filing date.

Just to play devil's advocate for a moment, put yourself in the trustee's shoes... What is your income level? Are you way above median? Does your lawyer think the US trustee will take an interest?

Even if a UST is not involved, the explanation of "I borrowed $25k for my buddy who paid me back $25k plus an add'l $7k" ... it just sounds a bit odd. While I was waiting in the room on the day of my 341, cases like this that smelled fishy... the trustee jumped all over it and hounded questions, etc. From one person who couldnt give him straight answers he really let her have it.

Does this mean you will get grilled? Maybe not. (Just mentioning the above for "worst case".) You have the benefit of planning ahead here.... so, try to put a solid year between the txfrs and the filing... and even in that case, you should still have solid reasons/answers if asked about all this.

Just my $0.02.

I have a loan agreement that was done (paperwork) that was drawn up and notarized showing this transaction. There is no way I can go a year before filing as I won't be able to make any payments to my cards as I will be negative by about $2k per month. I make about $120k Gross per year and my bills (mortgage, cars, etc) can be be paid with and we are still about $300 below breaking even. We are going to keep the home and cars and CUT WAY BACK!!

[TEW]

I have a loan agreement that was done (paperwork) that was drawn up and notarized showing this transaction. There is no way I can go a year before filing as I won't be able to make any payments to my cards as I will be negative by about $2k per month. I make about $120k Gross per year and my bills (mortgage, cars, etc) can be be paid with and we are still about $300 below breaking even. We are going to keep the home and cars and CUT WAY BACK!!

Is that loan being paid back in installments? That maybe income also.

[texanboy76]

Is that loan being paid back in installments? That maybe income also.

it was a 30 day loan and paid back all at once

[happy_ira]

it was a 30 day loan and paid back all at once

"How much was the largest that the balance on your bank account has been? Explain."

The bankruptcy trustee asked this exact question of nearly everyone at the 341 where I was. Where did $32k go? (You might have a very good reason, just be prepped to say if you used it overtime to fund the deficit... pay other credit card minimums... whatever...)

[TEW]

"How much was the largest that the balance on your bank account has been? Explain."

The bankruptcy trustee asked this exact question of nearly everyone at the 341 where I was. Where did $32k go? (You might have a very good reason, just be prepped to say if you used it overtime to fund the deficit... pay other credit card minimums... whatever...)

The trustee will have your bank statements for 6 months before filing in front of him/her
That's why everyone is saying a year and if they get ugly with you look out 2 years back on an audit.
make sure you plan this well

[texanboy76]

"How much was the largest that the balance on your bank account has been? Explain."

The bankruptcy trustee asked this exact question of nearly everyone at the 341 where I was. Where did $32k go? (You might have a very good reason, just be prepped to say if you used it overtime to fund the deficit... pay other credit card minimums... whatever...)

gotcha.....It's not like the $32K was brand new money. It was money that I paypal'd from my Amex card to help my buddy out. When he paid me back the original amount ($25K) + $7K he gave me I used that to pay my Citi down and then BT'd the amount from my Amex to the Citi since they had the 1.99%BT offer.

[happy_ira]

gotcha.....It's not like the $32K was brand new money. It was money that I paypal'd from my Amex card to help my buddy out. When he paid me back the original amount ($25K) + $7K he gave me I used that to pay my Citi down and then BT'd the amount from my Amex to the Citi since they had the 1.99%BT offer.

Makes sense to me; just make sure you say it concisely *if* (and he might not ask) the trustee inquires. I woudl say something like "well, I was so deep in the hole and here was an oppty to make $7k to pay some back... a drowning man will grab the point of a sword.... so, I did the loan and then got back the money..."

It's still a HUGE return ($7k on $25k in 30 days? wow).... s/he might ask about this. Or maybe not. Be prepared.

[Medora]

Wow, everyone seems afraid of having the Trustee ASK a question. If there are real, logical answers, i.e. I took advantage of a low balance transfer offer, let them ask, right? As you may have seen from me on other threads, I also have done a lot of BTs recently for large amounts, to lower my interest rate. That isn't rare. I also don't want to wait a year, because I have a lot of expense now (with the mortgage) but may not if we give the house back. Also, business SHOULD pick up by next year (there's a 6-9 month lag-time before we make each commission). Right now, my husband's business show's less than half the income of the previous year. Next year, who knows? Maybe more?? So again, yes, it would be great to avoid all flags and questions...but if there really isn't any fraud going on, why should we be worried? Am I missing something here?