What if Fraud is ruled?

[JJDog]

What is the worst the credit card companies can do to you (even if your on disability?) Just looking at worst case. You don't go to the clink unless you lie to the court I am assuming?

Basicly, had made a few cash advances ($2000) when I had little income (to keep in good standing paying credit cards), expecting the big $30,000 back pay, but it was a gamble, and still used the credit cards. I did get about a third of that, but needed a car, etc. (SSI, SSDI)

Can they still seek fraud? And what would that mean?-

[btbeme]

What is the timeframe we are talking about? How long ago were the cash advances?

The general guideline is about 6 months minimum since cash advances to avoid a "presumption of abuse". Now, a credit card company can challenge the cash advance or charges made within a "reasonable" timeframe before BK (and a Trustee can make a presumption based on a pattern that would indicate fraud) but those would usually need a pretty good breadcrumb trail to show that you INTENDED to file BK and made the charges and cash advances anyway. Hence, the question you will be asked in your 341 hearing - "When did you realize that you were bankrupt?" I hope the honest answer to that question is a timeframe some time after your cash advances.

That is a grossly oversimplified summary, but it should aim you in the right direction.

What could happen? Best case - no challenges and no presumption of abuse. Middle case - you could be liable for the amount(s) challenged. Worst case - your BK could be dismissed for fraud or totality of circumstances, making you wide open to lawsuits and judgements from creditors. Jail time is usually reserved for people who flaunt the system by hiding assets and lying to the Court. Usually.

A bigger question for you is the nature of your disability - is it considered long-term or permanent? Disability in of itself (and the loss of income due to it) isn't necessarily a free pass to qualifying for a Ch 7 BK. If the court determines that you have a good chance to have a high enough income after returning from a temporary disability, they may consider a Ch 13 or an outright dismissal.

[JJDog]

Ok, well it was a year and some since the cash advances. Permanent disability, but its very low payment, under $1000. I stopped using the CC's in November '11, and will still be getting some backpayments from medical bills and selling stuff to pay off the CC. I still thought I could get better or had hopes of getting better maybe a month ago, but treatment is impossible without a good doctor, which are almost impossible to find,and are going to be out-of-state, etc in other words:$$$$ which I don't have.

[btbeme]

If you are going to do a BK, don't sell anything, and don't pay on the credit cards. If you are a year out after taking cash advances, you are fine.

Any other assets or income? And what type of disability payments are you getting? Short term? Long term? Permanent?

[JJDog]

Long term permanent. less than $800.00- No other income. Assets: Some old clothes, sweaters, jackets, a truck I just bought 6 months ago under $4000.00, an old computer, a dresser set I could not sell for $400.00. Some CD's, a pistol, some camping stuff, some tools.

[keepmine]

For sure, stop paying those cc's.
It's OK to sell personal property just to keep food on the table, gas in the tank, pay your bk legal fees,etc.

[kornellred]

If a debtor is charged with fraud, it is up to the creditor to prove it in a court of law. If you accept money when you are insolvent knowing that you will never pay it back, that is considered a crime. People do this routinely nowadays, knowing that bankruptcy obviously looms in the future at some unspecified point. No matter how you slice it or try to rationalize it, if you use credit knowing that you will eventually file for bankruptcy, you have committed a crime.
It is not possible for a creditor to prove that you intended to defraud them if you make a few payments and then stop using credit for several months. All credit, not just particular creditors. That is why bankruptcy attorneys will not file a bankruptcy petition until it is clear that a debtor has not used credit for at least 3 months or more. There are cases where a debtor must file immediately, but there must be clear evidence of the lack of fraudulent intent.

Most bankruptcy fraud prosecutions involve hiding or transferring assets.

[joshuagraham]

I would say that a person believes himself to *possibly* be insolvent when he goes to discuss his "options" with a BK attorney. Anything before then, a person can reasonably presume that his fortunes will get better (i.e., he'll get that job, or his business will start turning a profit, etc.)

As for the timing - a year after CC advances or 6 months after regular use is always plenty of time - so long as there have been a few months of regular payments.

[kawh]

I am no lawyer, but most lawyer websites I've read, and it's a ton of them, say payments made are evidence of intent to repay. Also, we have to remember, what is the payoff for unsecured creditors who decide to sue in a no asset case? Not much here. And if the court rules against them because you appeared to speak up for yourself or had an atty to do that, the creditors will be out the court fees and your atty fee too. I don't know the whole total involved that you are worrying about, but if I were in your place I would not worry too much.