Opened credit while unemployed, in way over my head

[FilipinaBK]

Hello everyone, I am really considering filing for a bankruptcy, but don’t want to go to jail.

I have been here on the forum as a guest for a little while, and many of my questions have been answered by reading other peoples questions, but it seems that everyone’s situation is really unique. I have hoping to get some answers and feedback to my situation. Sorry if it is long.

I am a 30 yo Filipina living in Southern California. I was married since 2005 when I came to the US and he divorced me in early 2013 due to us always arguing. I do not receive any alimony, and the house we lived in was his before the marriage. After we divorced we have made several attempts to work things out, and lived together off and on up until March of this year.

I am currently a full time student and will graduate in December of next year with a bachelor’s degree in engineering. I have been unemployed for the past four years while attending school, and prior to that I worked at near minimum wage jobs. My only income recently has been from financial aid from school. I have also taken cash advances on credit cards when I felt I had no choice.

I am living in a friend’s house now, she is kind enough to only charge me a little and lets me pay when I receive my financial aid from school. I do not have a car, or any other thing of value really.

Around December of last year I closed my old credit accounts and opened new ones. I have very good credit and stated on my application that I have a high income, which was not true at all. I had no income, but my Ex was still supporting me and I thought things would work out. I also figured that by the time I finished school I will have a decent income and be able to pay off the few credit cards I had.

Between December and March I had charged nearly $35,000 on eight different credit cards ranging from limits of $16,000 to $3,000. I had taken a month and a half long trip to go see my family and spent like $20,000 on that trip alone. I bought several expensive electronics as well.

I am worried because I have read a lot on here about cash advances and large purchases and the judge being able to look back over your purchases. I don’t have anything to show for these charges, and I wasn’t working when I made them.

Since separating from my ex I have used the credit cards for living expenses and primarily for cash advances to pay the monthly payments on the credit cards. I thought I would be able to take enough cash advances to pay the minimum payment until I graduated, but it is not working out.

I currently have almost $50,000 in credit card debt with almost $10,000 being in cash advances. I have not taken any cash advances since May, but in May I had a single cash advance for $3000 and have been using it to make payments since. I have not made any large purchases since May, but prior to that I had made several large purchases for airfare, clothes, a laptop, etc., and had made payments on a car that I was allowed to use by an acquaintance.

I have since sold my laptop, camera, and almost anything I had of value. My grants from school do not nearly cover my living expenses in Southern California.
At this point I am paying more than $1200 a month in credit card payments. I have enough to pay the credit cards for maybe three more months. I take summer classes but may be able to find part time work to pay them for a little while longer.

I have no family in America to help me out. Several people have told me that I should consider filing Bankruptcy. I am in a situation now where I may have to quit my school and go to work back at Walmart or something similar, but I really would not want this to happen. I have worked very hard at school and get good grades. I did the math and if I were to work full time at Walmart it would take me years of living on almost nothing to even make a small difference in my debt.

I am worried for many reasons. I know this is my fault, and I lied. I was living a lifestyle that I could not support, but at the time it did not seem wrong, I thought everything would work out. In hindsight I am stupid.

Some of the questions I have

1) I am not yet a citizen, will filing Bankruptcy keep me from getting my citizenship?
2) If I do decide to file bankruptcy will I likely be charged with fraud because I lied on my credit card applications?
3) If I do decide to file bankruptcy will I likely be charged with fraud because my cards have only been open a while, and the charges were big amounts?
4) If I file a bankruptcy will they take my Financial Aid every semester?
5) If I decide to file bankruptcy should I continue paying the credit cards for as long as I can?
6) Will they know that I was unemployed when I opened the cards?

Thank you so much. I hope to get a few replies, and criticism is welcome. I deserve whatever you can say to me. If there is anything you notice that might be a problem please let me know. I am kind of resolved now to file a bankruptcy, unless it will cost me my freedom, I just don’t know when. I cannot afford an attorney at all, and have not been able to find a free one.

I am sorry if this is so informal. I feel that I know some of you already after spending every day on here for the past few weeks.

[FilipinaBK]

I must also add, my avatar is not my real pic, but similar (Im pretty sure she is from southern fils as well).

[LadyInTheRed]

You are not going to go to jail if you file BK as long as you are honest on your bankruptcy petition. The worse thing that would happen is a creditor would petition to have a specific debt declared not dischargeable. As long as you don't use a credit card for cash advances within 70 days before filing or for luxury purchases within 90 days, a creditor would have to prove you incurred debt fraudulently. The size of the debt you are talking about is not worth their trouble. I have yet to hear of a creditor accusing a BK debtor of fraud for lying on a credit application. I doubt the banks go back and verify the information on your application after you file BK. If they were going to verify the info, you would think they'd do it before they issue the card.

You should stop using your credit cards today! If you are going to file BK, stop making credit card payments too. In fact, even if you don't file BK and you can't make credit card payments and pay your living expense without incurring more debt, don't pay the credit card bills. Incurring debt to pay off debt isn't helping you. Use whatever cash you have left to pay your living expenses and maybe to pay a BK attorney.

If you don't pay your credit card bills, will you be able to pay your living expenses? If not, then you shouldn't file BK until you have enough income to pay your living expenses.

It seems that whether a BK will affect your citizenship application depends on whether the immigration officer thinks it means you don't have good moral character. http://www.nolo.com/legal-encycloped...s-citizen.html. You may want to talk to an immigration attorney.

If you file a Chap 7, the only assets that can be taken from you are assets you have or are entitled to on the date you file the BK. If you have Financial Aid in your bank account, you will list as an asset and exempt it. Since you don't have a home and live in California, in addition to other property exemptions, you will have a wildcard exemption of over $25,000 that you can apply to any asset. Financial Aid for semesters after your BK will be safe.

Make appointments for consultations with a couple of bankruptcy attorneys. Most give free consultations. They should be able to help calm your fears.

[FilipinaBK]

Thank you so much for your reply. I truly appreciate your advice. Someone else told me I should not continue to pay my credit cards monthly, its just hard to take that first step because I feel once I do that there is no going back. I understood everything, except maybe the part where I shouldn't file until I can support myself. I will be able to get by if I really try, if I were not paying my credit card bills. This would be $400 for renting a room, no new anything, and minimal food budget.
Still wondering, does the court look at how long the cards have been opened in general? Like one year minimum or something like that?

Thank you again. I will be sure to update if there is any news, although at this point its just me sitting here thinking, and stressing.

[keepmine]

The bk trustee isn't going to care how long the cards were opened.
If individual creditors wish to object then, that would be a factor they'd raise with the bk court.

What LITHR means by saying don't file until you can support yourself is, you really have nothing anyone can take. So, be certain that you have a basic safety net under you before you file. A job where you can pay your bills and offers health insurance. You don't want to file bk and discover that you still can't pay the rent or, get sick and end up with large medical bills and you caan't file bk again for 8 years.
There is no rush for you to file. Speak with a few lawyers and plan this bk out so it'll give you the maximum benefit.

[Drazil65]

Hi, what the previous replies state is probably the best advice as far as what to do with your credit cards and you absolutely need to start making those appointments with bankruptcy attorneys and create a timeline to file.

I would agree that you need to do what you need to do and that probably is to get a full time job and go to school at night. Or, you may have to take a break from school for a while until you get things financially right. I appreciate you owning your mistakes and seeing the writing on the wall, we have all had to do what it takes to get things on the right track. You will get through it and at least it is just you alone you have to worry about, you can easily live in a room mate situation in that case and that will help you financially. You are young enough to fix this part of your life and move on, it will not be easy and will take a lot of self discipline but you seem to recognize that its the path you need to go down. The best of luck!

[LadyInTheRed]

Someone else told me I should not continue to pay my credit cards monthly, its just hard to take that first step because I feel once I do that there is no going back.

There already is no going back. You are incurring more debt in order to pay off debt. It is a vicious circle you need to stop. It sounds like you have some cash right now. Don't throw it away paying off debt. Eventually, you will run out of available credit and will have no way to pay $1200 a month anyway. So, stop digging a deeper hole and start living on what you have.

You say you will graduate in December or next year. You are so close. So, stop paying the credit card bills and get a part time job if the cash you have now and financial aid are not sufficient to get you to graduation.

It is never too early to consult with a BK lawyer. I bet a lawyer will also tell you to stop paying your credit card bills.

[FilipinaBK]

Thank you all again. I will use the money I had set aside for payments to go see an attorney, I saw online one that you can get one for less than $1000. He had decent reviews.
Night school isn't an option, but my financial aid is enough for my room and food, and I can usually find text books for pretty cheap.
Given my major, a lot of the jobs when I graduate are government contracts. Hopefully they will be ok with my bankruptcy, but I guess it wouldn't be any better if I am being sued by multiple banks.
I am also considering just filling the paperwork on my own. I found a book on Amazon and because I do not have assets I think maybe it wouldn't be a very complicated case.
I hope you all are having a wonderful weekend.

[LadyInTheRed]

Your credit history will be relevant if you apply for jobs that require a security clearance. Having a discharged BK will most likely be better than having a lot of debt in collections. See my blog entry on the topic to understand why I believe that.

Do not pay any attorney or decide on an attorney before going to 2 or 3 FREE consultations. Do not bring your checkbook to consultations. Consultations will be helpful even if you later decide to file prose. Is the Nolo book the one you found? It is often recommended by people who have filed prose.

[FilipinaBK]

Yes, the book I ordered is NOLO. Actually there were two of them that I ordered, both by the same company. I plan on calling around this week to attorneys when I have down time from class.

[Northstar]

FilipinaBK, LadyinTheRed is offering excellent advise. I know it seems hard to stop paying on cards, but once you get over the initial shock, guilt, and awkward feelings of missing a payment, you begin to understand that pressing the reset button is by far the better option. Obviously, most of us wish we would never got into our compromised situations, but we can learn from our mistakes, bad luck, or other economic hardships and bounce back. I am going through this process now, and have my hearing in September. It is a huge monkey off my back to be free from $1000 monthly minimum cc payments. I plan to learn from my mistakes, as you can learn from yours. Best of luck to you!

[FilipinaBK]

Thanks a lot. This week I am just keeping myself busy with school and trying to not even think about it. I will just let the due dates come and go. When I really think about it, I cannot change what I have done but I can try and do the best from here on out.