Paid off a card, charged it back, stopped paying... will they object?

[wtunes]

Here's my situation:

I was offered a new credit card from "Creditor A" at 0% and took a cash advance for 5G about a year ago. Rather than just keeping the money in the bank until I needed it, I used the funds to pay down some other high-interest credit cards. My rationale was that if I wound up needing to charge it all back, I'd be no further in debt than I already was after the cash advance, plus I will have saved a lot in interest and minimum payments for a few months.

And that's exactly what happened...

I had another card from "Creditor A" that had been maxed out for a long time and was charging me 30% interest. I paid off that card, and used the remainder of the cash advance to pay down a card from "Creditor B". A few months later, I started charging necessities and maxed both cards back out, plus slowly charged an additional $1,000 on the 0% interest card, maxing that one out as well. I made all the minimum payments that month, and was unable to make any additional payments.

So it's been a year since the cash advance, and over six months since I've made any charges or payments. The balances on the original two cards were basically where they were originally, and I had 6G of new debt at a very low interest rate.

Here's my big problem:

I was unemployed at the time all of this happened due to family obligations. My spouse was working, all of our bills were current, and bankruptcy was not on my mind. My parents were in poor health a long way from home, and saving the day for them prevented me from seeking employment longer than I expected.

By the time things were settled, the charges had already been made, and I hadn't been working for over a year. I assumed I'd be able to find a decent job, pay down my debts and move on, but the horrible economy has left me still currently unemployed.

Reading HHM's FAQ on creditor objections makes me feel like it will be a slam dunk for my creditors. I was helping my parents, and they were helping me financially. So I wasn't insolvent, but the money they've been giving me isn't considered income, and I've been unemployed for a long time. I don't think my circumstances or my intentions stand a chance against the simple fact that I didn't have a job when I made those charges.

My feeling is that if I had just taken the cash advance, I wouldn't have a problem because it's been so long. Now I've got three cards to object instead of just one. About the only defense I can think of for the other two cards is that I basically paid them as much as I charged, but did it in the wrong order.

I haven't filed for Chapter 7 yet, but don't think I can wait much longer. Everything is set to charge off this month, and I'm scared...

[MSbklawyer]

Here's my situation:

Everything is set to charge off this month, and I'm scared...

First, don't be scared. These scumbags' biggest weapon is the fear that is born out of ignorance and the insecurity and anxiety that people feel when they are on the rocks financially. So many people are so scared and so ignorant of their rights that they just cave and do as they're told to make it all go away. Well, it doesn't go away. It gets worse. [It's the same principal that cops use on suspects. Put them in a jail cell to scare the $hi -- poo out of them and then, if they'll just admit they were near the scene of the crime, we can wrap this thing up and everyone can go home (except the suspect of course, but they don't tell him that)].

It is not uncommon at all for people in financial trouble to swap money and debt around from account to account in a desperate effort to stay afloat. It's not as though you had zero income and were homeless while you were making these charges. Your spouse had an income, you were current on your bills and you had reasonable employment prospects. Nobody could have predicted that the economy would crash and burn on the scale that it has.

Creditors rarely fight these things over the amount of money you're talking about here unless the conduct was just absolutely over the top and/or overtly fraudulent. It's an awfully hard thing to prove that someone made charges with an actual intent to defraud. And the cost to do it is prohibitive unless the debt is 50K or more.

I would suggest that you don't do this one pre se substantially

[backtoschool]

Here's my situation:

I was offered a new credit card from "Creditor A" at 0% and took a cash advance for 5G about a year ago. Rather than just keeping the money in the bank until I needed it, I used the funds to pay down some other high-interest credit cards. My rationale was that if I wound up needing to charge it all back, I'd be no further in debt than I already was after the cash advance, plus I will have saved a lot in interest and minimum payments for a few months.

And that's exactly what happened...

I had another card from "Creditor A" that had been maxed out for a long time and was charging me 30% interest. I paid off that card, and used the remainder of the cash advance to pay down a card from "Creditor B". A few months later, I started charging necessities and maxed both cards back out, plus slowly charged an additional $1,000 on the 0% interest card, maxing that one out as well. I made all the minimum payments that month, and was unable to make any additional payments.

So it's been a year since the cash advance, and over six months since I've made any charges or payments. The balances on the original two cards were basically where they were originally, and I had 6G of new debt at a very low interest rate.

Here's my big problem:

I was unemployed at the time all of this happened due to family obligations. My spouse was working, all of our bills were current, and bankruptcy was not on my mind. My parents were in poor health a long way from home, and saving the day for them prevented me from seeking employment longer than I expected.

By the time things were settled, the charges had already been made, and I hadn't been working for over a year. I assumed I'd be able to find a decent job, pay down my debts and move on, but the horrible economy has left me still currently unemployed.

Reading HHM's FAQ on creditor objections makes me feel like it will be a slam dunk for my creditors. I was helping my parents, and they were helping me financially. So I wasn't insolvent, but the money they've been giving me isn't considered income, and I've been unemployed for a long time. I don't think my circumstances or my intentions stand a chance against the simple fact that I didn't have a job when I made those charges.

My feeling is that if I had just taken the cash advance, I wouldn't have a problem because it's been so long. Now I've got three cards to object instead of just one. About the only defense I can think of for the other two cards is that I basically paid them as much as I charged, but did it in the wrong order.

I haven't filed for Chapter 7 yet, but don't think I can wait much longer. Everything is set to charge off this month, and I'm scared...

I think that your scenario is very typical for people who are on the spiral towards bankruptcy, and that you will not end up in an AP, especially since it has been a year.

[DeadManCrawling]

Agree with the others.

Many of us, perhaps most, engaged in the ole trick of switching balances, sometimes large balances, from one card to another to try to avoid interest rates. In our case, it was probably 50k over a couple years.

We were not committing fraud, just didn't know any better.

Since your charges are relatively old, I doubt you will have any issues.

Good luck,

dmc

[MrSmithster]

I think your ok for a bk. Keep reading these posts and you will see lots of others with similar transactions(and thoughts). With the economy and job situation, i think the courts are very understanding. This doesn't raise to a level of fraud, just bad decisions and circumstances, which is what got most all of us here. I was nervous because i did a $1000 cash advance 4 months before filing, i wasn't even questioned about it, sailed right thru. Your very typical of the average BK filer. Good luck

[Dst1]

Absolutely agree. MSbklawyer is spot on. Being erroneously optimistic is not fraud. The standard for fraud is "preponderance of the evidence". and you have a lot of evidence in you favor, a working spouse, a history of employment, etc. And remember that *each* creditor has to object. Most are not going to do so.

It's odd. People with 5k debt think it's a lot of money but there are people on this board that have discharged millions of dollars in debt.

As for the UST, they have bigger fish to fry. Unless the amount is more than 100k they are extremely unlikely to even look at you.

[catleg]

vermin on their heels.

I like your writing style.

[wtunes]

Thanks to everyone for your responses. I guess I feel a little bit better.

I've searched pretty extensively for objections on this forum. One guy did a 13G cash advance just shy of four months before filing. That creditor objected, but somehow, he was able to settle for $1200.00 with $50 monthly payments. Another person did around 11G about four months before filing and got an objection. Don't recall that poster saying what happened after that. Somebody else had a creditor threaten to object over $1500. He told them to take a hike and they never filed an objection.

So like HHM said in the FAQ, objections are rare... Still though, my creditors know I'm currently unemployed and there was a flurry of charges in the course of a few months... seems pretty likely they'll guess I must have been unemployed the whole time.

It's been six months since those charges, but I know they *could* object if they wanted to. Whether or not it's worth it to them remains to be seen, but I'm going to be very nervous until my 60 days are up...

I'm currently getting all my financial info together so I can take it to some attorneys with as clear of a picture as possible, and it's like reliving the whole time period over again... not exactly fond memories.

Does it help me at all that the only reason I was able to charge anything on the two cards was because I paid down the balances first?

[Dst1]

Thanks to everyone for your responses. I guess I feel a little bit better.

Does it help me at all that the only reason I was able to charge anything on the two cards was because I paid down the balances first?

yes.

You are seeing this from you perspective and not from the system's perspective. The Trustee, the UST, and the lawyers see thousands of cases like yours every year. Unless something LEAPS out at them they are not going to bother. It's not worth their time and trouble.

Does it fall within the statutory presumption of fraud? Then they will object.
Did you charge less than 4k (per creditor) in the nine months before you filed? Yes, then the odds on an objection are LOW. Like 10% low. Did you charge more than 4k but less than 9k in the nine months before filing. Then you chances of getting an objection are a little higher, 25-35%. Did you charge more than 9K in the nine months proceeding your filing? Yes, then your odds are about 50-50.

But just because the creditor objects doesn't mean the objection will be upheld. Only that it's a PITA.

Sorry to disappoint you but you are normal.

[music12]

you are very very typical. and you weren't trying to defraud anybody.

i would say creditor A was cheating you: why charge you 30% interest when they can charge you 0%? you absolutely did the right thing paying the high interest loan off with their own zero interest loan. made me happy when i read you did that