Prior meeting with lawyer and CC use

[downward2011]

I met with a BK lawyer a year ago after I was served with a lawsuit. I decided not to file, and instead to fight the creditor in court. I've been successful so far. During that time my bank offered me a line of credit which I took and used on some much needed home improvements. I've made more than the minimum payment each month. I made a good salary and could easily afford the payments and my plans were to pay it off. So far, so good. Now, I recently received word that my pay is going to decrease. In fact, next month is gonna be really tight. This makes me re-think my decision and possibly may be looking at a BK in the future. Without my current salary I can't afford those monthly payments. I've read many posts that says meeting with a lawyer means the debt won't be discharged. Is this always the case? Don't the courts look at all the circumstnaces?

[jeep75]

The fact you met with a lawyer a year ago and decided not to file will not even come up.

If a creditor could prove a debtor used the credit after deciding to file they could make it so it wouldn't be discharged but you can imagine how hard that would be for them. Even then, if the credit was used for food, etc.. it would still be discharged.

[btbeme]

Downward, what you do have is time. Nobody really WANTS to file BK, but I would argue that planning for one as Plan B makes good sense if you are staring into the abyss.

Go see an attorney or two. Previous meeting have no bearing whatsoever on your filing. The "Totality of Circumstances" clause allows a Trustee to dismiss a BK filing if he/she feels that the filing is unwarranted because of a constant trickle of little things that add up to...well, a smelly filing. Mostly, it is a Trustee saying "I just don't believe you."

Go see a few ASAP. Locate one that can help explain how the Means Test works so you can plan the next few months' decisions on how to shape your world in case you need to file. And, we are here to help you when you have questions.

[ttg1]

The fact you met with a lawyer a year ago and decided not to file will not even come up.

That's not accurate. It depends on the time frame and the circumstances. There is a specific question of the Statement of Financial Affairs (question #9) that deals with this issue. If the OP can answer that question "No" then it shouldn't be an issue.

[btbeme]

It depends on the time frame and the circumstances.

Exactly. What the OP has is time. And, since the OP's primary motivation for considering a BK before was a lawsuit and not overwhelming debt, I would think that Question 9 is an easy one to answer honestly - especially if a pay cut would be the motivator at this time.

[jeep75]

Question #9 says to list all payments made to lawyers or debt consolidation one year prior to filing. It sounds like downward had a free consultation and decided not to file. It doesn't ask if you've ever considered filing bankruptcy before or spoke to a debt counselor, only if you paid anything to them. If downward didn't pay anything within the past year prior to the date of filing (which will be sometime in the future) this question is a non-issue.

[downward2011]

It sounds like downward had a free consultation and decided not to file.

It wasn't a free consultation. The lawyer asked to see all of my documents then scheduled me for another meeting. Then when I came back for a second meeting he had all of the paperwork ready for me to sign. I told him I wasn't ready to sign yet. Then a month later I received a bill for $900. When I didn't pay the lawyer began calling me demanding that I pay the bill. I began paying that down a month or so ago to get him off my back. So technically my first payment to a lawyer would be two months ago. But I met with him a year ago.

[jeep75]

Did you ever sign anything saying you wished to retain this lawyer?

[downward2011]

I don't remember. He had me fill out a bunch of forms at the first meeting and then it wasn't until the second meeting that we talked about the details about bk and what the creditor could do if he got a judgment. We also talked about the fact that I was judgment proof. I just remember that I was surprised he had taken the time to prepare all of those forms when I hadn't told him I was ready to file. And we left it that I would contact him again when I was ready to file. And I haven't contacted him again because I'm not ready to file. But now this job thing came up. I can handle judgments. I can't handle a cut in pay.

[jeep75]

Do you plan to use this same lawyer to file now? The reason I ask is question #9 on my form lists the fees paid to him, there is no dates or anything like that.

[ttg1]

So technically my first payment to a lawyer would be two months ago. But I met with him a year ago.

OK. So now lets go back to your original questions about the debt being discharged. The answer is going to be, "it depends". You are going to have to list the payment on your BK form because the payment happened within the last year. Does that now mean your debt won't be discharged? No. It's going to depend on (a) the total circumstances of your case and (b) the trustee that you get and (c) who the creditor is.

If your circumstances are "Hi. I met with a lawyer and then spent 10,000k on a vacation in Europe" you are likely to get an objection. But otherwise, who knows. Different trustees are different. Different creditors are different. I know that it's desirable to have a clear cut answer to the question you asked but there isn't one.

[IamOld]

ttg1 - if I may ask a clarification - the issue of non-dischargibility MAY effect ONLY the debt that that OP was talking about not ALL of his/her other debt, correct?

[btbeme]

Now, if the payment was outside of a year before filing...

[ttg1]

ttg1 - if I may ask a clarification - the issue of non-dischargibility MAY effect ONLY the debt that that OP was talking about not ALL of his/her other debt, correct?

Typically, yes. That's my understanding. However, it depends on the total circumstances of the case. In theory if the abuse of one or a few creditors is bad enough the US Trustee could object to the whole petition. I think that's extremely unlikely, but the US Trustee always has the totality of the circumstances to fall back on.

The truth is that I'm just not a fan of categorical statements. Rarely in the law is anything categorical. It's better to use the language of probability/risk.