Ch.7 question from newbie

[bluesky]

Thanks to all for posting, the advice and real life stories here have helped alot, I have a question...just met with attny yesterday for initial consult, borderline for ch.7 but will pursue that for now. I just decided a couple weeks back that BK was a last resort who's time had come. In July I put approx 2k on one of my CC's, mostly for a vacation. At the time had no intention of filing or even asking questions. But it looks like it's my only choice. will that 2K in July be a deal-breaker???

[Frshstart09]

bluesky,

Hi. Most people here will tell you that you should wait 6 months to file while continuing to make minimum payments on the card you just made the purchase on to avoid any perception of abuse. I'm sure others will chime in. Good luck!

[liz417]

You should probably wait at least 6 months to file. If you need to file sooner and the creditor challenges the charge, you'll just have to pay back that amount

Edit: I stand corrected. It's 90 days for a "luxury" item and 70 days for cash advances.

[2manybills]

You should wait at least 90 days.

[LSUTiger32]

Look should is the operative word. If you have no choice, do what you have to do. What were the charges and were they huge charges or a bunch of small stuff that added up to $2,000?

The problem comes in where a creditor could fairly easily prove fraud if you are filing BK in late August but charged a vacation in July. You will be treading on thin ice there. Again though, do what has to be done. Six months of minimum payments might be $2,000 for you so you have to weigh that as well.

[backtoschool]

A $2,000 vacation charge (or series of charges that add up to $2,000) a month before you file will be a red flag for the trustee. You should wait at least six months to file if you can.

But if you cannot wait, the worst case scenario is that the creditor will object to the $2,000 and it will not be discharged.

Also, a vacation is considered a "luxury item" and would trigger presumption of abuse without the creditor having to prove intent, if the charge is newer than 90 days old.

If you can wait to file for six months, that would make your case less risky.

[jribe]

Thanks to all for posting, the advice and real life stories here have helped alot, I have a question...just met with attny yesterday for initial consult, borderline for ch.7 but will pursue that for now. I just decided a couple weeks back that BK was a last resort who's time had come. In July I put approx 2k on one of my CC's, mostly for a vacation. At the time had no intention of filing or even asking questions. But it looks like it's my only choice. will that 2K in July be a deal-breaker???

you'll need to wait probably longer than 6 months- likely 12. Unless you're okay with paying back that 2k? It can EASILY be proven that it was for "luxury" items (ie Vacation) and then you would be required to pay back those charges, should the creditor object.

I can't say for sure what will happen. Obviously no one can do that. But even at 6 months, you run a risk. I think (IMHO) that 6 months is more for other more discretionary charges - but not luxury. Like you needed tires, fixed a vehicle, replaced an appliance etc.

[bluesky]

more info...

...thanks for the replies. the 2k is about half hotel stay and half small stuff, food, gas etc. etc. When I met with lawyer for consult I totally forgot to bring this up, we looked at total debt and not details, plus I was so stressed remembering my name was hard work. I have to get together additional paperwork that the lawyer needs to crunch numbers and go back, I'll make a point to bring this "luxury" issue up. If the worst thing that can happen is the 2k is left on the table I think that's still cheaper than waiting several more months to file. But the lawyer should know what to do. I hope. You guys are great and thanks again.

[LSUTiger32]

Again, do what you have to do. This is just me, but it doesn't matter where you buy food and gas (home or vacation) those things are necessary. What if you were out of town on business or for personal family reasons?

The hotel could come into question, but the only thing that can happen is that this particular creditor objects and you have to work something out with these charges. If you can wait a few months (at least 3) then do that and things should settle down. If you need to get filed because of a looming foreclosure or judgement/suit then do what you have to do. Don't let this stop you from doing what needs to be done. It's likely a minor detail in the grand scheme of things.

As you said, talk to your attorney about it and see what he/she thinks. I think you will be fine. Even if they object, you will have options.

[bluesky]

....reply

...thanks "Bayou Bengal" and the rest of you guys. If I file ch 7 it will be mid to late Sept, more late Sept as I have to come up with the lawyer fees up front, about 70% of the fee up front. so at least there'll be 2 months distance between the hotel stay and filing. best I can do currently, thanks again.

[Pizza]

Definitely 90 days, I would try for six months, unless: Was there a particular trigger that happened AFTER the vacation that made you want to file? Loss of income, medical problem, etc? IF the creditor objects, you will be asked to explain why you felt solvent in July and not in August. Objections are not automatic, but depending on the cost of objecting, the creditor has a good chance against you here.

On the other hand, it's just $2,000, and not every charge sounds like an automatic flag. That's not a huge setback if you have a lot of other debt to discharge, and it will not affect your filing in its entirety.