Bought luxury Items with intent to pay

[WhyBK]

So I bought a few expensive luxury items when I was employed and when I had an intent to pay. The money I was going to use to pay my credit card bill was some money cashed out from stocks and a cash advance check from another account.

After the purchase the cash advance checks were canceled by the creditor and the value of my stock dropped so much I cant afford to pay now. That in combination with a couple creditors raising rates to 24% I decided I cant pay anymore. I can see how it might look suspicious making large purchases that caused me to go over my limit then stop paying my bill. I never planned it this way. Is this illegal though?

Now I am unemployed and thinking about BK. But I need to make sure these expensive luxury purchases 6 months ago wont hurt me. I read that there is a 90 day look back period. Am I able to file BK or can they say this is fraud? I had a job and everything when I made the purchases.

What if I wait a few more months? How long should I wait? Will it ever be safe to file BK in CA?

[needachance]

I believe that depends on what the luxury items are. They may not be exempt and the creditor may take them and sell them in order to pay off a portion of what you owe. Also, it may determine that you are an asset case.

[SMinGA]

I believe creditors can make a case for luxury/large purchases for up to a year. And what you have described, well they may have a case.

One tip: planning to pay by using a cash advance from another card is not exactly planning to pay.

You can file, but if these creditors file an objection they may be able to block the discharge on those particular debts. Not your entire case. What are the amounts and what were the purchases?

[HHM]

At a minimum, wait 90 days from when you bought those items.

[WhyBK]

I believe creditors can make a case for luxury/large purchases for up to a year. And what you have described, well they may have a case.

One tip: planning to pay by using a cash advance from another card is not exactly planning to pay.

You can file, but if these creditors file an objection they may be able to block the discharge on those particular debts. Not your entire case. What are the amounts and what were the purchases?

Are you sure its safe if I wait more than one year? The items bought were a computer, xbox, bracelet with my largest credit card ($40K). Will the make me just pay for those purchases or will I have to pay the whole credit card? If they say those purchases were fraud can I just pay that purchase?

If I cant discharge all my debts I wont even file.

[WhyBK]

I believe that depends on what the luxury items are. They may not be exempt and the creditor may take them and sell them in order to pay off a portion of what you owe. Also, it may determine that you are an asset case.

The items were an expensive bracelet, xbox, computer. Totaling about $6k on my $40K credit card.

I have no problem selling them if they let me get rid of my debt. I am just worried that they will try and argue I committed fraud and the credit card wont be wiped away. What can I do to protect myself? Is it just a matter of waiting a certain period of time?

If they say it was fraud cant I just show them I had a job and intended to pay but the credit card companies kept raising my rates to 24% and I decided I cant to it any more?

[ForumReader]

The items were an expensive bracelet, xbox, computer. Totaling about $6k on my $40K credit card.

I have no problem selling them if they let me get rid of my debt. I am just worried that they will try and argue I committed fraud and the credit card wont be wiped away. What can I do to protect myself? Is it just a matter of waiting a certain period of time?

If they say it was fraud cant I just show them I had a job and intended to pay but the credit card companies kept raising my rates to 24% and I decided I cant to it any more?

If you plan on filing for bk, I suggest you stop using any of your ccs and wait several months like HMM recommended. However, if you are concerned about these expensive items that you charged to your 40K cc, you might want to make payments to that cc for several months, then wait some more additional several months before filing for bk if you decide to file. This may lessen the risk of your creditor filing for an AP against your debt. Please remember that just because a creditor files for an AP or objection to a debt, it does not mean your entire debt will not be discharged, just portions of that particular debt may have to be settled. I think in your case, it would be wise not to use your ccs anymore, pay to that particular cc with the expensive items for a few months and then wait an additional few more months to file for bk if you decide to do so (this would most likely keep your creditor from filing for an objection). Good luck.

[WhyBK]

If you plan on filing for bk, I suggest you stop using any of your ccs and wait several months like HMM recommended. However, if you are concerned about these expensive items that you charged to your 40K cc, you might want to make payments to that cc for several months, then wait some more additional several months before filing for bk if you decide to file. This may lessen the risk of your creditor filing for an AP against your debt. Please remember that just because a creditor files for an AP or objection to a debt, it does not mean your entire debt will not be discharged, just portions of that particular debt may have to be settled. I think in your case, it would be wise not to use your ccs anymore, pay to that particular cc with the expensive items for a few months and then wait an additional few more months to file for bk if you decide to do so (this would most likely keep your creditor from filing for an objection). Good luck.

I stopped using the CC the same month I made the big purchase (6 months ago). So I can see how that looks bad but that just happened to be the time where everything bad happened.

So you are saying if they file a AP against my debt I only pay back those luxory items?!?? I dont mind that. I just dont want to have to pay the whole CC back ($40K)

[WhyBK]

I stopped using the CC the same month I made the big purchase (6 months ago). So I can see how that looks bad but that just happened to be the time where everything bad happened.

So you are saying if they file a AP against my debt I only pay back those luxory items?!?? I dont mind that. I just dont want to have to pay the whole CC back ($40K)

Anyone know?? TIA

[justbroke]

Did you stop using and stop paying? That makes all the difference. If you stopped using a "new" credit card, after charging $6K, then made not one payment after, the credit "might" file a complaint to determine that the debt is not dischargeable. That would show a pattern of fraudulent intent to not payback the debt. However, they would have to prove the fraud.

Not one of us can tell you if the creditor will file a complaint. As HHM writes, time heals all wounds, so the longer it was ago, the better. However, I add that if you never made a payment, or just made one or two token payments after charging $6K on a relatively new card... you should expect that the creditor will threaten a complaint.

[WhyBK]

Did you stop using and stop paying? That makes all the difference. If you stopped using a "new" credit card, after charging $6K, then made not one payment after, the credit "might" file a complaint to determine that the debt is not dischargeable. That would show a pattern of fraudulent intent to not payback the debt. However, they would have to prove the fraud.

Not one of us can tell you if the creditor will file a complaint. As HHM writes, time heals all wounds, so the longer it was ago, the better. However, I add that if you never made a payment, or just made one or two token payments after charging $6K on a relatively new card... you should expect that the creditor will threaten a complaint.

The card is 3 years old... I have made many payments in the past. But after the $6K charge 6 months ago on a $40K card I made no more payments.

Is there a time limit to where they cant object? Like if I wait more than one year since the purchases?

If they contest it will I have to pay that $6K charge back? OR THE WHOLE CARD?? big difference

[Confused33]

I bought a $6k motorcycle about a 2 months before I filed on a credit card that hadn't been used in months. I filed and they didn't say a word AND I kept the bike and sold it for $6k.

Quit worrying. It's not going to help your cause.

[eddiep]

our trustee asked everybody except me if they made any large purchased in the past 12 months. It would be just those items not the entire balance on the card that could be denied. Dont forget to claim those items when listing your assets!

[ForumReader]

I stopped using the CC the same month I made the big purchase (6 months ago). So I can see how that looks bad but that just happened to be the time where everything bad happened.

So you are saying if they file a AP against my debt I only pay back those luxory items?!?? I dont mind that. I just dont want to have to pay the whole CC back ($40K)

Maybe you should talk to some bk attorneys about your concern regarding the $6K purchases and making non payments after that. I would suggest though that you make some more payments towards that card and then wait a few more months of not paying any ccs if you decide to file. If you do, then seek consults from several bk attorneys. The thing is that since you made no payments on this card for the past 6 months and then suddenly decide to resume to making some payments towards that card, that is something you would need to talk to some attorneys about this approach.