Fraudulent Use of Credit?

[treehugger1]

Still trying to deal with many options VS bankruptcy.

I'm hoping someone can shed some light on the following scenario.

All of my unsecured debt is at a minimum 2 - 3 years old. There are two exceptions to this. Both of these $5k+ unsecured loans (by very large national finance companies) have been refinanced, one of them several times. The last time I refinanced the $7500 loan it was due to being 60+ days behind. I called them and said I couldn't make a payment, and they finally asked if I would be willing to refinance the loan. Not knowing my near future situation, i figured it wouldn't hurt to refinance and I would have more time to determine my course of financial action. Well, here it is four months later, and it appears I will be defaulting on this loan. I've made 2 - 3 payments on the loan. I have spoken with them and told them I am still dealing with financial issues, which they clearly knew when they refinanced the loan. My question, "Could refinancing the loan constitute fraud?" They have copies of my paystubs at the time I refinanced (in fact, this loan has been refinanced 3 times in three years), and all my credit reports, so they clearly could see my financial situation.

I'm concerned that should I default and stop making any payments, they might try crying fraud? Maybe I'm being paranoid. What are your thoughts?

What I'm hoping will happen is that they will send the debt to their in-house collections. This is where I've made the greatest strides in negotiating with some very big national companies. Still, ...

[lrprn]

TH, it's impossible to reliably predict what these large creditors are going to do.

Yes, they know you've been in financial trouble, and they've been willing to work with you. However, most creditors (especially large ones) don't seem to care much when their debtors are teetering on the edge. Whether they are nasty or nice to you, your creditors are going to continue their attempts to get money from you up until the day you file.

[CPO]

I don't see fraud. You refinanced in an attempt to make a bad situation better...

If you refinanced and they handed you another line of credit or cash and you went out and blew that with no expectation of paying it back, then I could see somebody's flag go up.

People refinance all the time to make payments easier to handle, and then find it's hardly enough and end up filing BK anyway.

If you don't pay on the loan, your going to be in default, so they will move the account into collections. How long that takes is variable. It could take long enough that the "recent" refinance won't even be something that anybody notices.

I just don't see a problem...especially since IIRC your not filing tomorrow...there will be some time before you file.

I would not be using any credit or further pushing this refinance window if you intend to file for BK, though.

You need 90 to 180 days since last activity on your credit accounts to reasonably expect no objections to your petition...if not longer.

The longer, the better.

Hope this helps. I'm no lawyer, but that's the way I see it.

Regards,

CPO

[treehugger1]

Thanks to all. The account is three years old and has been refinanced 3-4 times. The last refinance, they gave me a check for $98. They have to make their loan "numbers" operate correctly LOL. I've made approximately $700 in payments on this last refinance. The overall debt is $7500, so this will require a court action beyond that of small claims, so I'll have plenty of notice of their intentions when the default occurs. (Although, I'm assuming they will up my status to inside collections prior to sending this for court action).

I've only used one credit card (out of ten) in the past six months. I'm current on almost all of my cards and/or agreements within 45 days. If I choose this route of garnishment, I'll continue to keep one line of credit open (I won't use it) as I need a visa/mastercard number to reserve motels, etc. In my position, I travel a great deal, and am constantly making reservations. All of the hotels/motels I stay at will take cash payments for rooms, so i don't actually need to put anything on the card.

I feel a bit better about the potential for a defense should I be called to court for "fraud." I should have taped my phone conversations with this creditor.

[CATCHMEIFYOUCAN]

Just my 2 cents of experience:

I had several loans with the same credit Union refinanced several times (Consolidation Loans) and actually paid off all my credit cards, but ended up keeping the credit cards and blowing them up too! By the time I filed I still owed quiet a bit of money not only on the Loan ($18,000) but the creditors as well.
Also, as I mentioned in my previous post. One of the credit unions I was with gave me a new credit card in March 2006 ($10,000), they transferred the whole amount to pay off another credit card. I blew the credit card that was just paid off the following month in April 2006 ($10,000). I had only made one payment to the one credit card that they had transferred the credit from by the time I filed end of July 2006.

As IRPN stated .. " .. it's impossible to reliably predict what these large creditors are going to do."

And as CPO stated .. " .. If you don't pay on the loan, your going to be in default, so they will move the account into collections. How long that takes is variable. It could take long enough that the "recent" refinance won't even be something that anybody notices."

My loans and credit cards eventually moved to their collection departments, but by the time I filed I don't think they ever had time correspond with me much, number one because they didn't have any of my phone numbers. Some of the correspondence came by post office. But I guess my filing was perfect timing, due to the "automatic stay." AND I was only like 30-60 days behind on some of my unsecured creditors, the other "some," I wasn't behind but deciding to file Bk instead of negotiating seemed to be a better option to me.

As nervous and paranoid as I was because of all the cash advances, my Bk from Ch13 to converting to Ch7 - what seemed like such a long time actually took 6-7 months now that I can look back! The only objection I had was from the 1st Trustee during my Ch13 plan (objection to confirmation). And than the 2nd Trustee in my conversion to Ch7 delayed the process by assuming I had assets, only to find out I didn't.

Best Wishes, Catchmeifyoucan