$10K in cash advances - possible AP

[shabam]

In order to prove you were insolvent they would conduct a simple test. Which is a test of whether your assets were greater than your debt at the time of the advance. Income is not really relevant for an insolvency test.

I'm guessing you have some assets or reasonable money in the 401k, which they looked at and thought hmm we might be able to get something out of this person.

I would take HHM's advice and offer $1k.

[mike258]

Wow you spend $800. for food? How many kids do you have? With just my husband and I we budget just $150. to 200. a month.

Wow I wish i could spend that a month...I'm jealous. I spend $25 a month just on milk alone (2 gallons a week @ $3 a gallon). Then again, I have a family of four...

[mike258]

I do have funds in a 401K that could be used to pay them.

This, IMO, is the worst thing you could possibly do. 401K money is for your retirement.

Your 401K contributions are deducted before taxes. Any loan that you take out is repaid with AFTER tax money.

[Oblib2345]

Chase has threatend us with the same type of letter over a $7500 cash advance we took out 6 months prior to filing. My lawyer wrote them a letter essentially telling them to stuff it (a bit nicer than that), and we haven't heard anything since. I think that they will have a hard time proving anything, I would just either ignore it or have your lawyer respond telling them that you were not considering bk when you drew the money out and you aren't going to pay them anything. If they file an AP, then go from there. Hope everything works out, we are in the same boat until September 15th.

[justbroke]

I wouldn't offer anything at all. I would call their bluff. Perhaps have your lawyer "entertain" them by sending them a letter telling them that your charges fall outside the definition of presumption non-dischargeability and you're ready to proceed.

[KittyisBroke]

Shabam wrote:

In order to prove you were insolvent they would conduct a simple test. Which is a test of whether your assets were greater than your debt at the time of the advance. Income is not really relevant for an insolvency test.

Who is they? The UST? The bankruptcy judge? Who? I think maybe our debts were greater than our assets if you include the mortgage debt. Our income is very irregular, $16K and then nothing and then $4000 and then nothing and so forth. Real Estate commissions are not quite the same as salaried income. It has always been our practice to run up credit cards and then pay them off when a lump sum comes in. Part of the "cash management" of living with irregular income. You know there will be income in the future, you just don't know when. I can certainly show over the years that we always had large cash advances and then eventually paid them off. This time however, our ability to earn money has just dried up. Those eventual sales have not materalized, and the market is so bad here in South Florida that it will be some time before we can beging making a decent living again. I have taken a lousy job at a casino for $10/hr just to put food on the table and get health insurance. My husband continues with real estate, and we did have a nice closing this month to ease the financial stress a little. SO, back to the original thread. . .I think our past record of running up and then paying off credit cards shows it was our intention this time too, but the recession and credit crunch and housing bust all came together to kill us this time!

[joh]

150$ amonth for food. That would be salt soup 6 days a week and a loaf of bread on the
7th.

[KittyisBroke]

I agree, we really do spend about $800 month at the grocery store. That includes all cleaning supplies, paper goods, food, soda, the occasional cheap bottle of wine (Carlo Rossi) cat food and DOES NOT include steaks, gourmet or pre made items. I too cook most all meals at home. I can't imagine eating for a month on $150. South Florida is very expensive, but I just can't fathome anywhere that you can feed two for $150 a month. We are of course carnivors, but fruit is more expensive than hamburger sometimes!

[music12]

kitty, looks like you have all your ducks in a row. your history of payments proves that you never intended to not pay back. so you could prove it even if the burden was on you, and it's not - they have to prove you defrauded them.

in any event, asking a bankrupt person for $8000 is absurd. if they said $800, maybe.

don't go into your retirement funds; they are exempt for a reason!

see what your lawyer says; good luck!

[KittyisBroke]

don't go into your retirement funds; they are exempt for a reason!

Yes, I agree, the 401K is not a good idea. It is pretty big, $250K, but when you consider that because I am not 59.5 years old, there is a 20% mandatory to IRS PLUS another 10% penalty, it makes no sense to touch it. Also, just because it is $250K does not mean the whole $250K is spendable, there are always taxes to be paid on it when it comes out, even when you are over 59.5 years.

So we will just pray that no AP materilizes!

[klandsb]

Ditto.... It is just my son (20) and I and I can spend $100 easily a week for just the basic stuff. Of course the majority of time we pack our lunches for work but still with just the normal & a few odds & ends like laundry det, shampoo, dog food ect its an easy $500.00 a mth.

[klandsb]

Please excuse my last post... I was reading above and thinking outloud how they live on that little money spent on food and typed it in and sent it ...Of course I didnt keep reading down but now realize that was not the meat (ha,ha)of the topic.. Sometimes all the stress just gets to ya !!!!!!!!

[whipster1]

These are idle threats from the CC companies. The only time you should worry is if you took a vacation or did something truly extravagant with the recent purchases/advances.

If you want, offer them .10 on the dollar as somebody else said...but ONLY after they actually file the AP...that is the normal % for most of the chapter 13's in my district, and if an AP was successful and you converted that is all they would get if anything.

[banca rotta]

I have been reading this forum for months and it is great! Now it is my turn to ask for opinions.

We had our chapter 7 341 on July 27, no creditors. Seemed OK. The next week, our attorney got a letter from an attorney representing FIA Card Services (B of A) saying they were considering filing an AP due to a little over $10K in cash advances in the six months before filing. They offered us a settlement of $8000 on $10,300 in debt. The last cash advance was for $322.50 on April 10th and we filed on June 24th, 75 days later. So it was more than 70 days from filing and less than $750. All other cash advances were in January and February making them 120 days or more from filing.

I never paid the credit card bill after that last cash advance because we had finally decided BK was our only solution. Prior to that I hade never been late and always paid.

What is the general consensus of opinion, are we liable for this debt? Will they follow through with an AP or is this letter just an attempt to collect?

Looking at the timeline between your join date here and your cash advances you obviously took out the cash advance with no intention of paying it back. I could be wrong and what I think doesn't matter since I'm not the judge in your case.

What I don't understand is based on the above why you didn't at least wait longer to file. There are plenty of posts here with people like yourself that got screwed doing what you did.

[IBroke]

Wow you spend $800. for food? How many kids do you have? With just my husband and I we budget just $150. to 200. a month. I cook everything from scratch, we eat very healthy (plus very little meat). Right now were spending less since we have a garden.

Well, having a garden that big to live on a daily budget between $2.50 and $3.50 per person, you have to invest a lot of labor (time) in it. Shouldn't that be considered money, too?

All the power to you if you are able to live on such a tight budget but for the average family, that's not an option.