Complicated case

[Skippy]

I bought a car for my mom 10 months before I, and my parents, filed Chapter 7. It was 5 years old, and I paid $9500 for it. I used a cash advance on a credit card to do so. The car was a gift, but was very necessary. I travel out-of-state for a living, my dad had recently been disabled by a stroke and my 68-year-old mother was driving to work with a 15-year-old car that kept breaking down.

At the time, nobody was considering bankruptcy. It was only after we heard that the minimum payments on credit cards were going to double after the first of the year did we ever consider it.

Now, we've both had our 341's, with different trustees. My trustee didn't like any of my answers regarding the car. Now both cases have been extended, and paperwork says things like "fraudulant conveyance".

My 2 questions: How can I convince the trustee that there was no fraud here? And, what is the worst-case-scenario when this is all said and done? My poor mom is worried about going to jail! We have the same attorney, and the only thing his office says is, we'll just have to wait and see, its going to take time, etc.

[gak555]

I'm very surprised they went that far back. Hope one of the knowledgeble folks on this forum can shed light on this.

[keepmine]

First of all, nobody is going to jail.
The $9500 car is likely above the exemption allowed for your state. The likely outcome here is your mother either surrenders the car or, redeems the excess equity from the trustee.
You are an example of bad lawyering. You and your parents should never have used the same attorney since there were some interlocking isues. You should likely have waited another 6 months or more to file and used a different lawyer. Worse case for you is the possibility that the $9500 cash advance will not be discharged.
The entire mess is out of your hands. Look for the trustee to place your filing and your parents filing under a mircoscope looking for any other transfer of assets or property in the past couple of years.

[SinkingFast]

Pretty much, the Court is only interested in info from the most recent 7 months prior to filing. Bank statements, pay stubs, utilities bills, etc.

The Court also wants to know about any property transfers made within the last year. Did you disclose buying the car as a property transfer in the last year?? Or was it disclosed as a "Gift to an Insider"?? If so, did someone say the car was purchased with a Cash Advance on a CC??!!

Any large purchase, or Cash Advance made within the last year on a CC is subject to scrutiny. But typically, the Court only looks at the last 6 months of activity. Creditors, on the other hand, look at buying patterns established over a period of time. Most cases, the last year prior to filing. Sometimes as far back as 2 years prior to filing.

How long since your last Cash Advance or convenience check use prior to filing?? CC's charges?? Did you file after the 70/90 day periods had elapsed??

The Court and the Creditor are gonna have to prove intent on your part. Which they can't. Who knows what goes thru another person's mind. If you had a good job at the time, and the payments were well within your means for the forseeable future, then it's reasonable that you had every intent to repay the debt.

There may be a question as to why you did not use traditional, auto loan financing to make the purchase. Were interest rates a consideration?? Was the CC offering some really low rate until the balance was paid in full type of thing?? Could you not qualify for traditional auto financing?? These are a couple of the types of issues the Court is probably gonna want to know.

The Court can reak havoc with your parent's finances and look at everything from the last couple of years. Not to scare you or anything. Just to prepare you that your parents may be digging around for tons of info to show to the Trustee.

One potential avenue,........ The Court can make your parents "buy back" the car. Whatever amount of the vehicle's value that they did not exempt is subject to liquidation. Generally, the Trustee will figure an amount he/she is happy with and tell your parents they can "buy back" the car for that amount. The Court accepts payments.

It's hard to say what the Trustee will or won't do.

[StaciMM]

Transfer of assets to family looks back at least 1 year. In this case, its not a matter of fraud based on intent, but that your mom has property that the court sees as part of your BK estate. They can take the car, most likely.

Did the creditor object over the $9500 advance? From what you've posted, I'm guessing they did not-and the issue is just the transfer of assets.

[StaciMM]

Just wanted to add-I doubt the exemption is an issue.

If I give an 'insider' something of value and then file BK within a year, the BK court can demand that the item or its equivalent cash value be turned over to the BK court as an asset. In this case, its a double whammy since the asset was bought on credit. If the creditor objects & wins the objection, then the court could get the car AND the $9500 might have to be paid back.

[SinkingFast]

Just wanted to add-I doubt the exemption is an issue.

If I give an 'insider' something of value and then file BK within a year, the BK court can demand that the item or its equivalent cash value be turned over to the BK court as an asset. In this case, its a double whammy since the asset was bought on credit. If the creditor objects & wins the objection, then the court could get the car AND the $9500 might have to be paid back.

Ewww Staci!!

That sounds UGLY!!

[keepmine]

Well, Stacie said it a lot better than I did.
This lawyer was {as an old football coach I had liked to say} "just pisspoor bad".
He never should have accepted both parents and child as clients. This is one you may want to speak with another attorney about the possibility of a malpratice suit.

[Skippy]

Thanks for the help

Thanks for all the input! I'll let you know what happens.