bk 7 and rules on trading stocks

[bkfiler]

i saw a few cases on gambling and the courts considered that abuse in bk sometime. i cant find anything on trading stocks.

anybody come up with this situation and using the credit cards to fund stock trading? if you can find any case law or articles on it please post the link.

any cases with gambling would be good if you can post the info. my feeling is if the court doesnt like trading stocks then they would treat it like gambling i guess.

what i still dont understand is how did they come to the conclusion that gambling was abuse anyhow. gambling is legal. whats the diff between that and using the credit cards for anything else?

my case is that while looking for work i used the cards, along with my own funds to trade stocks. plan was to get a job and/or make money trading. made payments for well over 1 1/2 years and some even longer then that. ended up with nothing much left. had to move to different location and take any job. then got layed off again and now need relief from bk because i cant really see a way to get out from under this.

im curious how they are going to look at that. any practical knowledge would be great to hear if it applies to my case somehow.

[FoolAndHisMoney]

Not sure how they look at it, but if they can prove that you had no intentions of re-paying them then they have a case. If you were gambling or investing and intended on re-paying them if you win then that's your argument. As you mentioned they let you charge ANYTHING you want so you pretty much took them up on their offer. Every casino has a Visa/Master Card logo on dozens of ATM machines. I would think that they would remove this if they really care about gambling.

I never saw a convenience check offer letter that said "Buy anything, take a vaction, enjoy life, but don't gamble or invest it or I'll be upset if you file for bankruptcy".


It isn't what you spent your borrowed money on. It's all about if creditors can prove you borrowed it with no intentions of paying. Sometimes it's hard (actually mostly it's hard) and sometimes it's easy. Only time can answer this.

[bkfiler]

seems correct, but all the cases i've seen so far on gambling seems to indicate that they pick 'gambling' to try to dismiss just because of gambling itself, then add whatever facts they can along with it. these facts being anything that anyone of our cases also have in it as well.

if you have read dismissal motions and replies to the dismissal, and replys to the replies then you would know why im wondering so much about how they are going to view my case. in fact, im amazed at how little they have to prove to feel so strong for a dismissal. they just name a few things and its like it all falls on you. quite interesting actually.

if this really is true then the questions is how to not hang yourself at the 341 meeting while being honest. (question: why would the attorney let you speak then ? seems kinda strange that this is allowed to happen outside any standard questionare questions right?) the US trustee uses what you say to come at you with a dismisall and then you are screwed because the BK gate has closed. lol and it aint easy opening it up from what i have read.

one point i have noticed is that they seem to FIRST see if the debtor has expenses out of wack so that they can actually be shoved off into a chap 13. IF they see something, THEN they go for the throat on abuse alligations saying the debtor didnt intend to pay back (even when they were paying back for a long time lol) or somethign else jsut to add it to the dismissal. its probably a tactic to scare you off into a chap 13.

the problem is i cant find any dismissal yet where there was no income available to be shoved into a chap 13. strange huh? well, maybe thats true of maybe i just dont have the tool to search for it. probably both lol.

anywya, my original point is they spot gambling and go after it. hence my comment on gambling is considered abuse right off the bat. even in the court language they sure dont say much to try to agrue that point. its like its is matter of fact you are SOL.

cant find anything yet on trading stocks. if you can find something let me know.

[bkfiler]

by the way, i damn fascinated by this and like to investigate everything that im involved with. this is pretty much with everything i do. its not so much that im worried as it is id like to understand what im going through and what everyone that has been going through this (i.e. attorneys, trsutees, etc) already know from just being around it for years.

what happens happens and most debt regardless will be dropped anyway. but no reason to not plan my bankruptcy and know what to expect

[FoolAndHisMoney]

If I find anything I'll let you know. I read once (can't find it now though) about a judge that had to decide a dispute of discharge from AT&T credit card that the debtor blew 7k gambling and the creditor said "that's not allowed, he didn't intend on repaying". The Judge felt that if it wasn't allowed then they would have done more to stop advertising their logos on ATM machines in casinos and ruled in favor of the debtor and made AT&T pay the debtor's legal bills. Every judge as well as every case is different. No cookie cutter debtors so some people in this situation may not be that lucky.

[Genenco]

I think, that it's not a matter of what's legal or not legal, but it's the "Intent" or "Actions" of the individual.

A person running up say $45K in gambling debts and then spends 6 months paying on them and then declaring BK, could be thought of as "Addicted" (Or very sneaky) and thus, if they enter treatement, there's more then enough evidence, to sway a belief.

Now, in regards to "Stock Trading" that's kind of different. There's risks, but the answer is truly unknown in regards to outcome of stock buying and selling. After all, one buys that it goes up, another sells as they feel it's hit the "Peak"

Continuious losses though, shows bad judgement, but is also is acceptable for showing reasons for bankruptcy. I believe in the past, many individuals had "Incorporated" themselves so as to take advantage of bankruptcy laws available only to major corporations.

Not that they were about to "run off" after losing a bundle, but to stay "In the game" and thus, this is their "out"

What used to honk me off, was how many of these major corps could "reward" their top execs and then Bk out the company and they'd happily scoot off with loads of cash. Now that's changing and hopefully more is to come.

[rawar]

Re Trading Stocks

A lot might depend on what percent of your debt the loss from stock trading is. Because the purpose of borrowing to trade stocks is to make a profit, it is not a consumer loan. If more than 50% of your debt is from the loss of borrowed funds due to stock trading, your bankruptcy is not a consumer bankruptcy and no abuse motion would be allowed. A substanitial abuse finding can only be made in the case of consumer debt.

In my case, approximatelty half my debt is due to a loss on a stock purchased in part with convenience check money. My 341 is tomorrow at 9:00 AM. If I get any insights into your question there, I will post it tomorrow.

[AAAArt]

Right or wrong, Day-Trading (and I think that's the phrase you originally used Bk) is viewed by many as different than losses on a stock or stocks.
The traditional "buy and hold" or "value based buying" has become part of established American economics. By that, I mean, that the rich and those in power did this so the law leans strongly towards this.
Day-Trading is viewed as speculative and gambling. That is to say Grandpa or Grandma never did it that way.
Some people have made tons of money day-trading. Others have lost tons. Quite a few have done both. Where, IMHO, it compares is the risk/reward ratio or the Beta value assigned to it. You really aren't owning a piece of the company (especially if you do options), you are "betting" that the price of a stock will go up or down.
Until about 5 years ago (I'm rusty on the exact time frame...been out of the game for quite a while) you could basically develop a trend following model and do pretty well. Then the bottom fell out of that. The trend was no longer your friend, because there was no trend. Massive computer trading by companies who controlled 100's of millions of dollars (or even billions) could start a reaction which skyrocketed.
Trading for profit became more volatile, but during those times many stocks were just falling anyway. However, again IMHO, the "establishment was much more sympathetic to those who lost money holding stocks rather than trading them...unless you had were in high tech stocks, of which the "establishment" never really approved of. Probably because they were in IBM and other Blue Chip stocks and watched while high tech stocks made thousandaires into millionaires.
My point is that, we are only partially dealing with logic in this discussion. We are dealing with historical attitudes (unwritten preedents) and that is why it is so confusing. Art

[AAAArt]

A quick illustration of the above mentioned. Why is it illegal to play Poker except in legalized Gambling areas while it is legal to play Bridge for money anywhere in the US? Bridge was ruled a game of skill, rather than luck, even though there is significant skill required in Poker to win over the long run.
Could it possibly have anything to do with Bridge being invented by Cornelius Vanderbilt and flourishing among the rich and powerful???
Coincidence? I think not!

[quest42]

bkfiler -- What kind of search are you doing to find out cases on specifics like gambling or stocks??? How do you PACER search for dismissals? (Just curious! PM me if you want to answer confidentially...)

I am trying to lookup Chapter 7 cases with any tax involvement, and I can mostly find Chapter 13 cases. I searched for cases with party Internal Revenue Service in PACER. A hundred cases in the past few years came up in my district... Looked at 20 docket reports and 90% of them were Chapter 13.

Did you repay any of the debt you incurred? How long ago was it? This will probably factor in somehow... sorry, I do not have much else to offer.

[bkfiler]

i dont know. but i do know the bk forms ask specifically about gambling itself. so there must be some pre-determination about it that sets the flags red and rings the 'motion to dismiss' bells off in their minds. trading isnt on that list.

my attorney says im fine. i had a plan. i had the savings. i showed intent by paying for many months past a year and it just went wrong.

i say 'no way' after i read these dismisall motions and appeal court rulings and read what the trustee, US Trustee or judge is arguing/complaining about.

its all very facinating. i get the feeling, however, that it aint gonna work without some complaining and the sole reason is because of the amounts involved. the $2000 card aint gonna say squat but the $22,000 is gonna cry like a baby lol. its all about business lol.

i see lots of people with 40K incomes and $80K+ debt. they all slide right on by. (well not exaclty but you know what i mean) but people with 100,000 income and $100,000 debt (not $200K like the doubling of income to debt that they did) will still draw more attention.

these are just some of the things ive picked up reading through all these cases so far.

[bkfiler]

quest, no i cant and dont think you can search pacer using key words. we would need lexis-nexus or whatever to do that. its a lot of money lol.

all i can do is search the internet and find cases and then read them or is possible look them up on pacer to see what the arguments are.

yes i kept paying my debt for well over a 1.5 years or longer.

i didnt file because until the commericals urged me and then subsequent website reading told me that i could, i never knew i could dishcarge credit card debt - i thought you had to have a house, car, property to protect etc. i filed only recently and all this mess started with unemployment under 4 years ago, made well over 1.5 years of payments and now we have all this time from then i just tryed to get back on my feet to live. lots of time elapsed. guess i should have done it sooner but just didnt know and always thought id pay them back as much as i could.