Filing Chapter 7 and Timing

[BKBlues65]

I have to file Chapter 7 BK in California. Thought I was thinking ahead of the game knowing part of my income would be dissappearing in Feb 2009. In November I purchased a washer/dry, refrigerator and a few other necessities to be prepared for the future. Silly me should have researched the laws first. Ooops!

My question is this; Should I continue to make minimum payments on my cc's (the ones I used) for this month, stop paying in Jan. and hold off on filing for 90 days?

I also, was leasing my car and per the consumer credit counselings advice purchased it Dec. 10, 2009 while my credit was still good. It's a $32k car...did I screw up? I am in Outside Sales and have to have it...this worries me a bit.

I appreciate any input.

Guess I should throw my atty some cash, he's not very helpful as of yet.

Thanks a bunch!

[danaf]

I'm sorry - I don't understand. Did you purchase the household items (washer/dryer/fridge) with cash or cc's?

[jribe]

[QUOTE=BKBlues65;228239]I have to file Chapter 7 BK in California. Thought I was thinking ahead of the game knowing part of my income would be dissappearing in Feb 2009. In November I purchased a washer/dry, refrigerator and a few other necessities to be prepared for the future. Silly me should have researched the laws first. Ooops!

My question is this; Should I continue to make minimum payments on my cc's (the ones I used) for this month, stop paying in Jan. and hold off on filing for 90 days?

I also, was leasing my car and per the consumer credit counselings advice purchased it Dec. 10, 2009 while my credit was still good. It's a $32k car...did I screw up? I am in Outside Sales and have to have it...this worries me a bit.

I appreciate any input.

Another Californian! Welcome
On the car- are you planning to reaffirm it? If you are - it's not an issue at all. My husband and i have 2 cars that both have loans over 20k on each, and each are only worth about 12k. So after speaking with an attorney- he advised to get another reasonable car, that's affordable- and let the other 2 go. So we bought a really nice 2006 Honda Accord Ex for about 16k. No probs there!

As far as the purchases go- i would say to make the minimums on the cards at least for January. How much would you say you spent on the cards in Nov/Dec?

We had also made purchases on some of our cards- one big purchase was for my husbands job- some software he needs to do his work, and other things like cell bills, insurance etc.

Our lawyer said just basically stop paying; because you're wasting your money. But my thought after reading so much in this forum is about the presumed abuse or fraud. If the creditor wants to, they can file an adversary proceeding- which will cost you at least $5,000 for many CA attorneys BTW, if they even handle them.

My thoughts are these:
1. If you distance yourself at least 90 days from last use- that helps
2. Make the minimums at the very least for the months you used the cards, and a month after.

We won't be filing anyway until May or June. So that would put a good 5/6 months between last purchases and date of filing

Hopefully some others will chime in as well.

Good luck!

[BKBlues65]

Ok here is what my Attorney sent to me below:

It depends on the amount and nature of the purchases. The law creates a presumpiton that luxury purchases aggregating more than $500 to a single creditor within 90 days of filing were fraudulent. The law also creates a presumpiton that cash advances aggregating more than $750 to a single creditor within 70 days of filing were fraudulent. That being said, the liklihood of any complaint for, say, $,1000 of any kind of routine charge within those time periods is remote.

[Dinero]

Source

Ok here is what my Attorney sent to me below:

It depends on the amount and nature of the purchases. The law creates a presumpiton that luxury purchases aggregating more than $500 to a single creditor within 90 days of filing were fraudulent. The law also creates a presumpiton that cash advances aggregating more than $750 to a single creditor within 70 days of filing were fraudulent. That being said, the liklihood of any complaint for, say, $,1000 of any kind of routine charge within those time periods is remote.

BKBlues65, what you say sounds logical, but can you quote your source? Suppose there is something that simply MUST

purchase before you file Chapter 7 costing around $500 like a dishwasher or

something, but let's say that for good measure, you divide up the costs between 2

credit cards. Would that be a way to keep your life operating and still qualify for

bankruptcy?

[tcreegan]

Hi dinero,

You might not get a response from BKBlues65, the post was Dec 2008......

But your source is Section 523(a)(2)(C)(i) of the BK code

Using credit when you are 'insolvent' is fraud, and to file BK you are assumed to be 'insolvent' 90 days before you file.

If the amount is low and for ordinary household expenses, it probably won't matter. Larger charges closer to file date might draw the attention of the trustee and get some extra scrutiny on your case.

Welcome aboard, keep the questions coming...

Tom in Colo

[backtoschool]

BKBlues65, what you say sounds logical, but can you quote your source? Suppose there is something that simply MUST

purchase before you file Chapter 7 costing around $500 like a dishwasher or

something, but let's say that for good measure, you divide up the costs between 2

credit cards. Would that be a way to keep your life operating and still qualify for

bankruptcy?

Buying a dishwasher right before you file for bankruptcy (within 90 days) is considered fraudulent use of the cards because the legal definition of insolvency is 90 days from filing. Your creditors will have the right to file an ap against the charges and they will win. The charges will become non dischargable, and you will have to pay both your court costs and the creditors court costs. If the purchases are too excessive, or show bad faith you also run the risk of having your bk dismissed, although this is rarer than an ap.