Help! Please? Can't pay Minimum anymore! Need Advise!

[ChaseBites]

Hello,

One Income, Gross 70-90K per year depending on Overtime.
4 family members total. Live in CA -Alameda County
1 car payment, $350/Mo
$110K in Total unsecured CC Debt. All up to date.
$5K in airline tickets on one card in late June 2009.
$1.6K in Airline tickets on another card in August 2009.
Can't pay minimums anymore since payments/interest went up.
Cost of living went up.
Been borrowing cash from one card to pay the next min due.
I don't want to do this anymore.

Question: Is it OK to stop paying now and file Ch7 in a few months and reaffirm the car? Or should I continue to borrow from one card, Like $200-500 at a time and pay the next?

Thank you,

Chase Bites!

[OhioFiler]

If you plan to file BK stop paying any card you haven't recently taken an advance from. Put a good six months between those airline tickets and filing BK.

[backtoschool]

The airline tickets will be a problem if you file short term. You will need at least six months between buying the airline tickets and filing, and you will need to make minimum payments on the cards that the airline tickets were on for several more months if you want to avoid an AP and having the cards that the airline tickets were on contested for discharge.

[ChaseBites]

Thank you both backtoschool & ohiofiler!!

Then will it be OK to continue taking small advances from other cards to pay those minimum payments to those cards with the airline tickets?

Also is it OK to make payments, but make them "late"???

[CityFarmer]

Cash advances can be a problem, too. Have you made any payments on the airline tickets?

[backtoschool]

Thank you both backtoschool & ohiofiler!!

Then will it be OK to continue taking small advances from other cards to pay those minimum payments to those cards with the airline tickets?

Also is it OK to make payments, but make them "late"???

I would not pay the minimums with cash advances. Even if you only pay on the cards that have the airline tickets on them, and not pay on the other cards, that is preferable to taking cash advances so close to filing bankruptcy.

[CityFarmer]

As I think about it more, I believe that any additional debt at this point (cash advances, purchases, etc.) would be technically fraudulent, since you are already planning on filing bankruptcy and therefore would be taking on additional debt with no intention of paying it back. Here is what I suggest:

1. Stop charging on credit cards. This includes cash advances.
2. Stop paying on unsecured debts, and base your budget on that.
3. Since the airline tickets may be a problem in a bankruptcy filing, try to come up with some extra money each month to make at least partial payments on those two cards. Do not borrow from another source to do that.

Of course, that's just my opinion, and may have no basis in reality.

[ChaseBites]

Made 3 payments so far on the airline ticket balances...

[2manybills]

Made 3 payments so far on the airline ticket balances...

You should be fine! Stop making your payments and get yourself in a position to file. Were the airline tickets for a vacation or were they business related?

If they were for a vacation, I would definitely put 6 months in between. Besides that, you'll be able to keep your car and should be fine at your income level as far as the means test goes.

[backtoschool]

Made 3 payments so far on the airline ticket balances...

Because they are for large amounts and would be considered "luxury" tickets, I would make 3 more payments.

[indigoblue]

Keep it up, you are nearly there!!

[ChaseBites]

But if I make min payments only to the airline tickets CC - wont that be considered "preferential" payments, or ?

[2manybills]

But if I make min payments only to the airline tickets CC - wont that be considered "preferential" payments, or ?

How much are your payments?

[CityFarmer]

Payments are only considered preferential if they occur within 90 days of filing (longer for "insiders" such as family members). So if you wait at least 90 days after the last payment before filing, it shouldn't be a problem.

[backtoschool]

But if I make min payments only to the airline tickets CC - wont that be considered "preferential" payments, or ?

Preferential payments do not affect you. If the trustee decides you made preferential payments, the trustee will get the payments back from the creditor. It does not affect you. It is better to make 3 more payments and avoid an AP than to worry about preferential payments in your situation.