Credit card apps and false statements

[bailoutplz]

my wife and i are planning to meet with a lawyer today. We have over $90k in debt, but have never been late. We both have credit scores in the mid 700's. We received some of our cc by overstating our income. We had every intention on paying the debts. we are just so far over our heads, it doesn't make since to keep robbing peter to pay paul. Will the misstatements on the credit card apps be an issue?

On another note...one of my creditors is my employer. Is this going to be an issue?

[Klesko]

As for over stating your income on the credit card applications I would not worry too much. Even if it was widely over stated it would be unlikely to cause a problem.

Your employer bring a creditor might be an issue. I would try and give more information if you can.

[justbroke]

Will the misstatements on the credit card apps be an issue?

It depends. If the credit card usage has aged a bit, like many many months (6+), then you are likely to not have any issues.

What a creditor can do is file a complaint to determine that the charges are non-dischargeable because of fraud (or that the charges are recent for luxury goods and services). Most creditors will only bring up fraud if there is some basis. If the time that has elapsed since getting these lines of credit, and filing bankruptcy, along with when your last "major" purchase was, is greater than 6 months... the odds of them doing this are low.

Many people overstate their income, but if it's significant and they could "prove" that you materially misrepresented yourself, they could win on the fraud claim. There's a case that I reviewed recently in which the debtor not only put false information on their application, they gave "phony" IRS Tax return copies to the bank. The bank relied on the information being accurate and extended credit. In this case, it was easy to prove the fraud. If it were simply the overstatement of income on the app, that would probably not stand alone.

The only time would be if you ran up tens of thousands of dollars real quickly on luxury goods, even outside the 6 months. Proving fraud or fraudulent intent is difficult for these creditors, but they do win some of these complaints.

On another note...one of my creditors is my employer. Is this going to be an issue?

This depends on your employment agreement. They cannot fire you solely for filing Bankruptcy, but many States deem employees to be "at will" employees.

Again, on the credit cards, unless it's real recent and looks like "eve of bankruptcy spending"... they aren't going to file any complaints.

I hope I didn't make you more nervous, unless you went beyond just overstating your income.

[bailoutplz]

I work for a bank. I've had the card since October 2008 and used it for balance transfers. Thanks for your replies.

[hereforinfo]

Is it a large bank, or a small local bank?

They can't fire you solely on the basis of the bankruptcy, but if they have anything else in your employment file that is negative they can use that as a reason in addition to the bankruptcy. Unless you have a stellar record and perfect history with your employer, there could be issues. But I think it really depends on who the bank is. I think a small local bank would be more likely to cause problems, especially considering you are defaulting on a card from your employer.

http://www.peoriamagazines.com/ibi/2008/dec/discharging-employees-who-file-bankruptcy

"In conclusion, courts narrowly interpret the Bankruptcy Code and protect only those employees who establish that their termination was solely because of their bankrupt status. You can discharge an employee after initiating bankruptcy, provided you are not ending the employment only because of the bankruptcy filing. Moreover, based on the case law to date, an employer can refuse to hire an employee because of the employee’s past bankrupt status. Transferring a bankrupt employee to another position solely for filing bankruptcy, even if no adverse economic consequences result, likely violates the Code. Finally, the Code only protects an employee who formally seeks the protection of the Bankruptcy Code. "

[mike258]

I had to provide the UST copies of all loan and credit card applications for 2006, 2007, 2008 and 2009.

They were specifically looking for misrepresentations of income.

[crescentmoon]

Where on earth would you even get copies of your credit card applications from 2006? I think 90% of my credit card application were done online! Goodness knows I didn't print anything out!

[mike258]

Where on earth would you even get copies of your credit card applications from 2006? I think 90% of my credit card application were done online! Goodness knows I didn't print anything out!

You have to request them from the original creditor.

[backtoschool]

Typically, misstating income will be a problem with a creditor if you have a large balance (over $5,000) and there were charges newer than six months before filing. The creditor will file an Adverse proceeding on the basis of fraud (ie you lied about your income) to keep those charges from being discharged. You have to provide at least two years of tax returns to most trustees, and your income will be listed on your schedules, so that information will available to your creditors.

If the balance transfers were recent (newer than six months) you are more at risk. But it costs the creditor money to file an adverse proceeding, and they want to make sure they can win it before they file.

As for your employment, it depends. Banking is one industry that is not bankruptcy friendly. Banks will often not hire a person due to a bankruptcy on their credit report. If you bk'ed on a credit card with the bank you worked for, you will be in the same boat as any employee with a bankruptcy on their record. The bank will not like it and may try to find a reason to get you out of there, especially if you work directly with monetary decisions or handle money.

[2manybills]

Typically, misstating income will be a problem with a creditor if you have a large balance (over $5,000) and there were charges newer than six months before filing.

I would say this is not typical! It is more about the balance, the last date or "large" charges and/or balance transfers. It also has to do with how long you've had the credit card apps and how much you exaggerated your credit cards. It costs the credit card companies a lot of money to file an AP and however they do make money on writing off your account (as crazy as that sounds). Now if you charged $20K two months before you filed or even $10K, that's another matter.

[backtoschool]

I would say this is not typical! It is more about the balance, the last date or "large" charges and/or balance transfers. It also has to do with how long you've had the credit card apps and how much you exaggerated your credit cards. It costs the credit card companies a lot of money to file an AP and however they do make money on writing off your account (as crazy as that sounds). Now if you charged $20K two months before you filed or even $10K, that's another matter.

We are saying the same thing, read my post again.

[Chowder]

There's several posts here about these cases being thrown out because of banks not performing due diligence.

It's more likely any application misstatements would be used to force settlement.

[2manybills]

Typically, misstating income will be a problem with a creditor if you have a large balance (over $5,000) and there were charges newer than six months before filing. The creditor will file an Adverse proceeding on the basis of fraud (ie you lied about your income) to keep those charges from being discharged. You have to provide at least two years of tax returns to most trustees, and your income will be listed on your schedules, so that information will available to your creditors.

To me it looks like you are making an an "unequivocal" statement, i.e., "The creditor will. . ." or "you have to provide at least two years tax returns. . ." I disagree. It depends on your district, it depends on your trustee, it depends on how backed up the courts are, there are so many variables in each court, in each district and in each circumstance.

[shabam]

You do have to provide tax returns to the creditor if they ask. I just do not know if there is a time limit to this, idelly before the 341. Otherwise, it could mean they can ask for them up to the date of discharge.

[backtoschool]

To me it looks like you are making an an "unequivocal" statement, i.e., "The creditor will. . ." or "you have to provide at least two years tax returns. . ." I disagree. It depends on your district, it depends on your trustee, it depends on how backed up the courts are, there are so many variables in each court, in each district and in each circumstance.

Agreed. Creditors are more likely to file an AP if the charges were recent, and were over $5,000.

Two years of tax returns is the standard for my district, and from what I have read, many other districts. I think everyone has to provide at least the most recent tax return, which in the OP's case would show the false income since the OP got the card in Oct of 2008.