Stop paying for a year?

[HalfPaycut]

I would love to fix up my run-down house with cash, but my state has a $25K homestead exemption. Wouldn't home improvements be a waste of money for me?

[OhioFiler]

This is basically my game plan as well. We can't move now, between the real estate market and our credit, so invest in the current house. New bathrooms, new roof, etc. Before some darn trustee gets involved, starts telling me I have to pay those unsecured creditors something (as opposed to the nothing they're getting now)

So investing funds into the home prior to BK is not scrutinized? I'm ready to remodel a bathroom but thought I should wait until after the filing.

[treehugger1]

A couple of years ago when I first started considering a BK 13, I was on my way out of town and stopped at the local gaming facility and threw a few 20's in the slot machines. I won a few thousand dollars. I was speaking with the attorney a few weeks later and he informed me that I had just messed up my 6-month "income." The local trustee considers ALL income in his 6-month average. Needless to say, it gave me another 4-6 months to sort out my plans. Turns out it was a good thing. In addition, I had to show the gambling earnings on the next year's tax return. It was a substantial amount of money and taxes were automatically withheld by the casino.

It was interesting that the attorney stated that the local trustee was not all that concerned about gambling unless one had recently used credit cards for cash withdrawals to gamble with, or unless one was a "professional gambler," who consistently was winning large sums of money. (Pretty uncommon, but with the amount of folks who gamble it is not impossible for there to be gamblers who do seem to win. The trustee was more interested in the proposed disposable earnings.

I occassionally still gamble if I'm traveling out-of-town, but I've never won anything like I did that one time. In addition, if one is gambling beyond a few dollars here and there, it's probably not recreational.

There have been several posters on this forum in the past who were very addicted to gambling. You can do a search and see what happened in their cases. Some of these posters had run up tens of thousands of dollars in CC cash withdrawals at their local gaming facilities.

If you are gambling with your own cash, not credit card withdrawals, I don't know what anyone can say about it. The problem is that so many states have state-authorized gambling places with machines now-a-days in order to generate revenue, and encourages gambling via television commercials, that it has to be tough for a trustee to hold someone's gambling problem against them.

Gambling can be a very serious pathologocal addiction, and as such, I would assume trustees recognize this.

The same can be true of folks who consistenly trade stocks and consistently lose their own large sums of money.

Whose to say what constitutes "gambling?"

I never had enough money to seriously gamble as I was too busy trying to save myself from a bankruptcy and kept paying all the interest on 25% - 29% cards. Hey, that is sort of like gambling when you know that ultimately you will lose. LOL

[Confuzed]

So if you have a job but are in major debt and you go and stand in front of a judge/trustee and say that you boozed it up, ate out, partied & gambled, they pat you on the back and you're good to go??

Like seriously, I know it sounds funny, but what if someone had crappy cooking skills and went out and ate out everyday at restaurants, boozed it up at bars and clubs, and hit the slots hard before going back home to the point that you are seriously broke every week.

Also, what about travel. What if you got on a plane to visit a family member, or friend, out of the country even. Will a trustee say "What is that on your statement, you used a check card to go to Cancun Mexico and you booked a hotel and rental car* This is what I hate about check/cards + bank accounts.
*note that the purchase was made from your check card, not on a credit card which are burned out or charged off)

[treehugger1]

It can be complicated. In my state, there are uniform asset transfer statutes that apply to transfers of any kind including cash. However, the exemptions also apply. For instance, suppose you gave a car to your brother when you had a reasonable sense that you were being sued for a debt. If the car's value was under the exemptions limit, say $2000.00, then you have not "given any non-exempt assets away." If the asset given away exceeded your exemption amount, then the judge has the right to go to yoru borther in an attempt to recover the money above your exempted amount. The same is true in my state with respect to wage garnishment. Suppose you have 25% garnishment. You decide to give $1000 to your sister when you suspect you are being sued. Technically, you might be asked to fork over $250.00, but the remaining $750 was ALWAYS exempt from seizure. In addition, someone would have to show that you intended to defraud the creditor, etc. This is very tricky and can be costly and time consuming to prove. Especially, if you understand how your state laws refer to exempt assets, etc.

Oregon does not allow the federal exemptions in BK. The exemptions for BK here are the same exemptions afforded to all debtors. Many folks are well within their exemptions, but they will run right out and declare BK not understanding they had state-specific exemptions from seizure.

Every state is different. As weird as it seems, there are plenty of folks who walk away from debt who know their exemptions and the ramifications of bank and wage garnishment.

OJ Simpson was the perfect example. He literally had nothing to give up to satisfy his judgment from the civil suit. As such, the plaintiff's family collected very little, if anything from OJ.

The issue of fraudulent transfer generally comes up when debtors or small businesses transfer assets to someone else when they had reason to believe they were being sued. In terms of consumers, the issue is very muddy. As an example, if you can show you have addressed every lawsuit int he past, and in other cases you asked for DV from CA's but never received them, what would lead you to believe you might be sued.

Your question related to running off to Cancun or traveling to see family members is your choice. Do you really think that a judge will go after the airline, hotel, etc in an attempt to find the 25%. I'm not so sure.

Can you be thrown in jail for spending money when you owe others? Probably not. The matter is a civil issue, not a criminal issue. Hence, we have judgments that can last for 20 - 30 years making use of renewal. In terms of economic gain to society, you still spent the money and the money was used to sustain the economic direction of all (Maybe not the creditor.)

The issue comes down to BK. When you file for BK, you can be expected to possibly account for how you spent your money during the last year (or longer with some trustees.) My take is that this is not as relevant in a chapter 13 case.

If you choose to be a deadbeat (walk away with no intention of paying,) then there is little control over how you spend your money. But, once you are sued, you are under other laws outside of BK. Such laws address the transfer of assets with intent to defraud creditors, etc. As I mentioned, if you have a history of attempting to work/request info from CA's and creditors and they never respond, why would you think they might sue you?

Every state is different! I think BB knows what I'm attempting to describe here and perhaps he can add his own knowledge in the state of WA.

I'm no attorney, but I see little evidence of folks going to jail because they didn't pay their debt. There are plenty of folks who choose not to file for BK because they would prefer to cover potential personal medical issues, family issues, etc. Eventually, when the time is right and the issues have leveled off they might consider BK.

I know I'm ranting, but I think this is important information. This is why moving to a cash only personal economy and using prepaid debit/gift VISA cards can protect you from future scrutiny. Until you are sued, what you do with your assets is your choice. If you intend to declare BK in the near future, then your past financial sistuation will be scrutinized. On the other hand, if you don't intend to declare BK and can move to a cash/money order situation, why bother to even keep receipts?

As always, if you owe the debt, and you know you owe the debt, someone will come for it through the court system. At that point, you best consider what you are doing with you assets and cash, or declare BK and let the cards fall where they may.

Just my opinions.