Common reason for an audit from the UST ?

[BKHELP138]

I have VERY high amount of unsecured debt. I lost my job about a year ago and need eye surgery since I lost my vision. So the debt got out of control. I settled with a few credit cards but still owe a ton. Would this along cause an audit ? My attorney seems to think everything will be fine says it is higher risk but shouldn't be a problem. The reason for asking is I have won 2 of the 3 cases in court I was sued for and can settle with the 3rd. So if my chances of getting my BK not discharged I rather not file. Any help stories or ideas would be great.

Ps:Im only Filing Bk chapter 7 for the CC debt. I do not have any other loans but my house which Im keeping.

[tcreegan]

Hi BKHELP138,

Around here high amounts of unsecured debt is 6 figures, sometimes high 6 figures...

The bigger worry for an audit is your income compared to your state median-income. Have you done a means-test yet?

Tom in Colo

[BKHELP138]

My debt is is the High six figures. It is all unsecured credit card debt and most if not all have gone to 3rd party collections not sure if that makes a difference or not. I am unemployed currently so I pass the means test. I have no assets and my house has no equity. I am keeping it cause it would cost me more to rent. I have my house, no car,not much cash and no other debts besides my CC's. The last time I used them was between 1-2 yrs ago. I paid on them forever but when I lost my job I stopped. Had the surgery and now im finally good to go back to work. I sign on November 1st 2010 . Thanks

[2manybills]

It will depend on what district in California you are in. Also, your income at the time the debt was incurred, was it business debt, etc. We went in with over $140K in CC debt and not a peep from anyone and we were over median.

[BKHELP138]

My income at the time the debt was incurred was six figures. I had ever intention on paying but lost the job and had a serious injury. Im in So CA im sure a lot of big debt here in So CA so I hope no audit. Some of the debt was business debt but personally secured so its the same as personal debt. They are trying to collect from me and not the company because I used my SS not the tax ID. Im just super nervous and scared it will be dismissed due to the large debt. I mean they gave me the credit lines. Does it matter if it has been charged off and sold to third parties ? anyway enough stress for one day .. thanks for everything

[2manybills]

In So. Cal. average debt is over $100K. Sad but true. It doesn't matter whether they have been charged off or whatever. I'm sure you will be fine, but it is very nerve wracking that's for sure. My attorney was a good friend of mine and he kept assuring me that we would be okay. But in the end, I stressed myself out for nothing. I realized I was just a speck and wasn't as important as I thought I or it was.

[IBroke]

Im just super nervous and scared it will be dismissed due to the large debt.

Fortunately, CH7 has no debt-limit so you could even be in the 9-digit area. The same laws apply at an audit - no matter if you owe $1 or $1,000,000,000. I'm at about $350K as well and honestly, I think I would feel worse if I would be filing for $3,500.

[BKHELP138]

Ibroke keep me posted on your case if you would. Im in the same boat with the debt. Do you think you will trigger an audit. Not sure why im so scared of an audit I have nothing to hide. No assets no money I didnt sell anything or transfer assets. Damn I feel like crap. I agree with you on the less amount I would feel worse. I just hope im making the best choice. My mind is a dangerous thing........

[tcreegan]

Hi BKHELP138,

Damn I feel like [fecal matter]. I agree with you on the less amount I would feel worse. I just hope im making the best choice.

You are doing the best thing for your future, remember that BK is a business decision that is the best course of action for your long-term financial health. You are in good company, about a million folks filing BK in this recession.

My mind is a dangerous thing........ Never go in there alone...

The fact that you are up to 3rd party collectors just means you put the original creditor and each successive collection agency on your creditors matrix. Wasn't a big deal in our court.

Just wanted to send some words of encouragement...

Tom in Colo

[IBroke]

Ibroke keep me posted on your case if you would. Im in the same boat with the debt. Do you think you will trigger an audit. Not sure why im so scared of an audit I have nothing to hide. No assets no money I didnt sell anything or transfer assets. Damn I feel like crap. I agree with you on the less amount I would feel worse. I just hope im making the best choice. My mind is a dangerous thing........

I don't have assets or any kind of income - so I'm not afraid of an audit. What I don't have can't be revealed. It's as simple as that. Unless the trustee thinks I can pay off my $350K-debt with food-stamps...

[scorpion35]

I don't have assets or any kind of income - so I'm not afraid of an audit. What I don't have can't be revealed. It's as simple as that. Unless the trustee thinks I can pay off my $350K-debt with food-stamps...

no income and no assets?how did u get in so much debt
thats what the trustee will probably want to know ,no?

[tcreegan]

Hi scorpion,

Most folks had income....had being the operative word there....and when it went away they rack up credit debt trying to hang on.

And lots of us hang on way too long, like the old saying, 'I never gave anything up that didn't have claw marks all over it'

Tom in Colo

[2manybills]

I'm sure the trustees have seen time and time again nowaday where folks incomes have gone from six figure incomes to nearly nothing. The biggest thing the trustee will be looking for is whether or not there are assets. If you have documentation, if you are above board, you have nothing to fear but fear itself.

[IBroke]

no income and no assets?how did u get in so much debt
thats what the trustee will probably want to know ,no?

And if he asks, I will tell him:

I had a nice income from a German company I worked for. So yes, I used a lot of credit AND paid it back as long as I could. When the economy collapsed, the German company decided to pull their business out of the country. That happened about 4 years ago. So actually, I didn't pile up any additional debt AFTER I lost my job - it happened before. The only "unpaid" loan I have is the current auto-loan from our only car, an 11 year old Mercury - and that loan will be reaffirmed.

I had fancy cars which went to repo - no asset but they still want the remaining balance of $70K. My investment-property went into foreclosure - another $80K debt without an asset. The rest is CC-debt that has gotten bigger and bigger over the years due to interest and fees. The things of value I once owned and which were purchased with those CCs like electronics and some watches were sold a long time ago to make ends meet. So these "assets" disappeared as well.

There you have it: $350K debt, no income and no assets.

[Dee]

Hi scorpion,

Most folks had income....had being the operative word there....and when it went away they rack up credit debt trying to hang on.

And lots of us hang on way too long, like the old saying, 'I never gave anything up that didn't have claw marks all over it'

Tom in Colo

"Claw marks" - LOL! We had a 6-figure income as well before before everything went south. And I do have to admit that just about everything had claw marks!