Possible dumb query re that "$500" purchase to a single creditor

[nickifan]

I'm looking over a questionnaire by the attorney I may hire. Also included is a list of "mistakes to avoid prior to filing" BK.

There is this item I have seen mentioned before:

"Consumer debts incurred for luxury goods and services owed to a single creditor in excess of $500.00 within 90 days of filing are presumed to be non-dischargeable ..."

Is that a SINGLE purchase of $500 or more, or a COMBINED total of purchases? I've had none that would be considered "luxury"...but I haven't seen it spelled out whether it's for a single event or combination of purchases in that timeframe.

Similarly, the attorney asks: "Have you made payments in excess of $600 to any one person, creditor, or anyone else during the last 90 days?"

That's different phrasing -- payments vs. purchase. So does that mean the more than $600 I spend over three months to pay my health insurance premium? So he just wants to know, even though I've read here that type of expense is "okay"?

Many thanks.

[justbroke]

It's aggregate or "combined". Luxury is anything that's not necessary for your health or welfare of you or your dependents. For example, buying a television of any type, could be a luxury. Buying food, "reasonable" clothing", paying for shelter, medical needs and other items of such type, are not considered luxury.

Similarly, the attorney asks: "Have you made payments in excess of $600 to any one person, creditor, or anyone else during the last 90 days?"

That's different phrasing -- payments vs. purchase. So does that mean the more than $600 I spend over three months to pay my health insurance premium? So he just wants to know, even though I've read here that type of expense is "okay"?

Your attorney is asking about payments. This also includes money you gave to someone you know for any purpose (including gifts or money to "hold for me").

Your health insurance premium is not a luxury item, but he may want to just see what you spent the money on. Yes, they are talking about payments. Such as you paid on a credit card. Or, you paid your mother back the $1,000 you borrowed from her earlier. Any "payment" on a debt.

[ApresMoi]

I was reading about this in NOLO last night. I was actually debating whether I could get away with paying a relative (who I owe about $1200 to), say $500 now, and still file next month. I would be under the $600 limit, and while I would not be paying off the entire debt, at least it would be better than paying them nothing (for months, while the BK runs its course). Would this just be asking for trouble? According to NOLO, any amount $600 or above is a problem.

As to the 90 day rule, I have combined charges that exceed $500 by a small amount (none luxury though) on each of the cards and the attorney mentioned there is some 'risk' that creditors would challenge that even though it's not luxury. He also made it clear that waiting 90 days is no guarantee that they won't challenge. A creditor will be looking for 'evidence' or 'signs' that you knew you were going to file or could not pay and you used the cards anyway. That's fraud (in the creditor's and court's eyes). One of the things they will look for is the date that you consulted with or hired a BK attorney (apparently a date may be referenced on BK paperwork) and compare that to card charges. It really is wise to stop to using the cards way in advance of filing, from everything I have read (minimum of 90 days).

I'm looking over a questionnaire by the attorney I may hire. Also included is a list of "mistakes to avoid prior to filing" BK.

There is this item I have seen mentioned before:

"Consumer debts incurred for luxury goods and services owed to a single creditor in excess of $500.00 within 90 days of filing are presumed to be non-dischargeable ..."

Is that a SINGLE purchase of $500 or more, or a COMBINED total of purchases? I've had none that would be considered "luxury"...but I haven't seen it spelled out whether it's for a single event or combination of purchases in that timeframe.

Similarly, the attorney asks: "Have you made payments in excess of $600 to any one person, creditor, or anyone else during the last 90 days?"

That's different phrasing -- payments vs. purchase. So does that mean the more than $600 I spend over three months to pay my health insurance premium? So he just wants to know, even though I've read here that type of expense is "okay"?

Many thanks.

[ApresMoi]

"Your attorney is asking about payments. This also includes money you gave to someone you know for any purpose (including gifts or money to "hold for me")."

I pay a lot each month for a storage rental, critical to keeping possession of my goods that I have no room to take in my current living space. Will that 'payment' be seen as not necessary to my health and welfare? Will they ask the storage folks for the money back? It's several hundred per month and definitely more than a $600 limit to one party in a 90 day timeframe. Thanks.

[AngelinaCatHub]

I have to agree with ApresMoi and I ALWAYS agree with Justbroke.

My strong advice is DO NOT PAY ANY FAMILY OR FRIEND ANYTHING during bk. List them and inform them. Your debt to all of them will be legally discharged, but after that you may pay anyone you wish.

Take my firm advice as I was a victim of ignorance and got the privilege of paying my family twice. Once to them, and once to the Trustee so they would not be sued for "avoidable transfer". 'Hub

[justbroke]

Your attorney is asking about payments. This also includes money you gave to someone you know for any purpose (including gifts or money to "hold for me").

I pay a lot each month for a storage rental, critical to keeping possession of my goods that I have no room to take in my current living space. Will that 'payment' be seen as not necessary to my health and welfare? Will they ask the storage folks for the money back?

This will depend on the Trustee. Since it's holding your property, I'm assuming that you're not in a similar-sized home and/or are between homes. While the United State Trustee (UST) could just decide to be a pain in the neck, you just need to be able to articulate that it's your family's possessions, that the payments are temporary, and that you are trying to get a fresh start, and need your belongings to do so. (Wow, I just made that up!)

[ApresMoi]

This will depend on the Trustee. Since it's holding your property, I'm assuming that you're not in a similar-sized home and/or are between homes. While the United State Trustee (UST) could just decide to be a pain in the neck, you just need to be able to articulate that it's your family's possessions, that the payments are temporary, and that you are trying to get a fresh start, and need your belongings to do so. (Wow, I just made that up!)

Yes, smaller space here, and that's a big part of why I don't have the goods. However, I've maintained this storage for YEARS (and it's in another city/state) so it will be pretty hard to say it is temporary.

They are going to know about it because it's a big expense every month, and will be on Schedule J, under 'other' I believe. The assets in the unit will have to be listed on the schedules and the Trustee will see they are in a different location. I guess I don't have to point out how long I have had the unit, right?

Blimey...hitches such as this make me want to run to an attorney. I have viewed that expense as part of my monthly 'rent' (combined apt. and storage unit costs for years), as together both are still less than what many pay for an apartment rental in my area. Considerably less as a matter of fact. That's how I have justified it maintaining it.

I had also thought that once I am out from under the debt cloud, that I could save up funds to deal with a professional move, and that moving to more expensive space would actually be doable, etc. Once I am off the credit treadmill...things are possible.

Should I see atty. consultation about this? Geez..these 'issues' keep cropping up.

(Also, apologies to nickifan for my buttinsky, but the topic seemed related and it's too late to start a completely separate thread. Sorry about that.... )