would this be credit card fraud?

[ils66]

I'm new here. We filed chapter 7 back in 2003, but might need to again, but not sure. I have a stupid question regarding credit cards. Back in 2008 my husband got laid off. I know I should not have done, this, but we got a few of those preapproved credit card applications in the mail. I went on line and filled them out and lied about our income. I said we were self employed and exagerated about our income. Didn't think we would get approved and we did. One credit card had a limit of 300, the other two were 250. We did not use them for luxury items, just food and we paid a few utility bills. We never paid a penny on them and now they are in collections. We have other debts in collections as well. If we had to do a bk again, how would this look to the trustee? Would they look at our application I filled out to get them?

[LadyInTheRed]

The trustee would never know unless the credit card company objected to the discharge of the debt based on a fraudulent application. That isn't going to happen on debts of that size. Even if a creditor did object, that would be an action between you and the creditor. The trustee would be no more than a spectator.

[ils66]

Here's another stupid question. I have medical bills that add up to 4600. I went to the er when my husband was unemployed and we had no insurance. We never paid a penny on that either. Will a bankruptcy trustee ask us why we didn't pay any of our debt when we got income tax refunds?

[LadyInTheRed]

Here's another stupid question. I have medical bills that add up to 4600. I went to the er when my husband was unemployed and we had no insurance. We never paid a penny on that either. Will a bankruptcy trustee ask us why we didn't pay any of our debt when we got income tax refunds?

The trustee can ask anything. But that kind of question isn't likely. He'll be more interested in making sure you didn't hide your tax refund under your mattress and not report the cash as an asset, spend it on non-exempt assets that aren't listed on your petition or make preference payments to creditors.

[ils66]

The preference payment is one reason we have not filed. I borrowed money from a friend since 2008 totalling over 5k. I have paid her back 2800 of what we owe. I paid her with my income tax refund from our 2011 taxes and have not paid her since. We did not pay a dime to the other creditors we had in collections. I'm not sure how far the trustee can lookback in tx. If we had to file, we will be in the clear since I paid her over a year ago?

[bcohen]

Do not lose sleep over this. No creditor is going to file an AP over a $500 debt, even a vindictive creditor, because the cost would far outweigh their potential gain. Remember that even assuming a creditor files an AP and wins, so their debt is not discharged, they still have to collect, and often times that is difficult to impossible. Likewise, a hospital is not going to file an AP over an unpaid ER bill, and a trustee isn't going to care.

As long as your income and assets listed on the petition and schedules jibe with where you live, it is very unlikely that a trustee will challenge anything. The trustee is interested in investigating people who live in a 5-bedroom house and had a good income in the past, but now claim to have nothing but some old clothes and a beat-up car. The trustee is not going to bother someone who has always been poor, lives in a small apartment, and claims to have very little property. He will, of course, ask about any tax refunds or other money which you are (or may be) entitled to, but if you spent the money on living expenses, the trustee will drop the matter.

[joshuagraham]

I recall reading about a case in which the creditor claimed that the debtor had lied on the application about his income, but since the debtor did not produce any forged documents in support of that, it was not ruled fraud. I suppose anyone can consider his income to be anything he wants it to be.