Cash advance

[leftyf]

I took a cash advance of $8K about 2 weeks ago to pay closing costs on the house I was selling. Of course, the house was underwater and I had an interest only loan, but I was happy to avoid foreclosure.
My question is: What impact will this have on my chapter 7 or 13 filing that I am planning? I will meet with an attorney soon. Do cash advances cause problems when filing because that is what most of my debt is? I financed a lifestyle I couldn't afford for too many years.
Thanks for the input.

[follie]

Yup. You will have to push back your filing date so that it won't look like fraud.

[CATCHMEIFYOUCAN]

Worst comes to worst you will end up paying those cash advances back through a Ch13. I guess they say in here the more distance you can put between cash advances and filing the better your odds of getting debt wiped out. Don't feel bad, all I used my cc's were for Gambling/Cash advances. I attained a new credit card for $10,000 in March 06, by the very next month I wiped out the $10,000 (even $6000 in one day/night) at the casino. I filed for Ch13 July 06. Oct 06 I was able to convert to Ch7. I was discharged as of Jan 07.

Best of Luck, CMIYC

[SinkingFast]

The Rule on Presumption of Fraud is 70 days for Cash Advances and 90 days for CC charges. Cash advances or charges made withing the 70/90 day time period prior to filing can give your Creditor grounds to claim you Intended to commit BK Fraud.

So you definitely do not want to file within that time frame. And the longer beyond the 70/90 days you can wait, the greater your chances improve that your Creditors will not Object or file an Adversarial.

[CityGirl]

and my attorney said, with a 13, doesn't matter. He had a guy do a $25K cash advances within 2 weeks of filing and nobody objected. The CC companies, he said don't really care to worry about it. I spoke to him last night. He said you'd think they would cry fraud but none of them do. He's been doing this 13 years and he said, not once has he seen it.

[HHM]

With chapter 13's, the cash advance issue is not that big a deal. Worst case scenario, the creditor has the debt declared a priority debt and therefore the gets paid before other unsecured debts. If you end up filing a chapter 7, then, with that amount of money, you will need to wait at least 6 months before you file.

[Bandit]

I have some questions about this.

Q)
What is the difference if you take a 5,000 cash advance & show you paid the hosptial or you charge 5,000 to the hosptial?
Do I still have to wait six months to file either way?

Q)
My other question is this. My friend borrowed me 2,000 so that I could get the surgery immediately and treatment from my fall & used his debit card straight from the bank to do it. This is documented & have the reciept. I want to pay my friend back right away & the only way I can do that is to take 2,000 cash advance write a check showing I paid them back. The money still all went to the hospital in the end.
Do you follow this one?

The thing is this...I have always used my cards wisely by using them only when there is a promotion or interest less than 2%. I do not have that option at the moment because my Doctor wants his money. So, I am stuck paying them in different ways. Month by month automatic to the CC then I pay that. Cash advance at a low rate & pay it back.

This is turning into a cycle that I am not used to doing.

Q)
What is the difference if I pay the Doctor 5,000 by a low interest cash advance or I pay the Doctor with him swiping the card at a very high interest rate? when it comes to a BK?

See, I have another doctor I have to see after this one releases me & they all want some money down before they start treatment. I will be seeing this one at least until Christmas.

Obviously I wont be going BK for awhile because I have no choice but to pay these guys a little up front...and that little bit to me is a whole lot of charging which I know I can never pay back. My hunch is, it will easily be 6 months to a year before I actually can declare a BK & in the meantime, I can't just NOT pay some of these bills. It would be different if there was only one Doctor invloved but this is going on over a long time frame & other Doctors.

I feel like I am being punished in some way.

If any of the above makes any sense, please reply.

[keepmine]

Medical treatments are not a luxury. Just pay with a cc and be done with it. Wait until all medical treatments are completed before filing.
Paying an insider is a different story. Since these medical procedures are ongoing, go ahead and pay him with a convenience check if you wish. You'll still need to hold off filing until you get all of the procedures done.

To the OP's situation. I just can't understand why you would care what happens to the house if you are surrendering it in bk. Noway I'd have payed $8K to avoid foreclosure if I was filing bk and not keeping the house. Part of a successful bk is, you have to stop making bad financial decisions and this one just makes no sense.
I'm beginning to see why you seem reluctant to tell your lawyers the whole story. Sometimes, you just have to put the shovel down-the hole's deep enough.

[Bandit]

Medical treatments are not a luxury. Just pay with a cc and be done with it. Wait until all medical treatments are completed before filing.
Paying an insider is a different story. Since these medical procedures are ongoing, go ahead and pay him with a convenience check if you wish. You'll still need to hold off filing until you get all of the procedures done.

I am definately going to pay my friend back with a cash advance/courtesycheck before this ends because after I do BK there will be no way to do it and that is not right.
What I really should do is, have the hosptial reverse the 2,000 to my friend then give the hospital 2,000 with the CC. That way he gets his money back from whom he gave it to.

Are you saying that because these tens of thousands of dollars in medical bills are not a luxury to go ahead & put it all on a CC and I will be allowed to file in four months from now when the treatments are finished & all those bills are in?
Or will I still have to wait 6 more months to file after the final bills are in because I charged them?

If I can file immediately after all the medical bills are in (because they do not view medical as luxury) then that will work.

If I have to wait 3 to 6 months to file after all the medical bills are in and all charged up high on the CC, then it wont work because I will hit ground zero too fast with the higher minimum payments & interest on the cards.
The medical bills take smaller monthly payment amounts than the CC will, Even if it goes to collection for payment. Of course I had no choice for the initial downpayments.

I still do not understand what the difference is, If I charge it or take a cash advance & send them the exact amount of the cash advance or use the courtesy check & send it to them.

Do you follow me on some of this, keepmine?

[keepmine]

If you're going to file bk anyway, why are you worried about high balances and interest rates? It'll all get washed out in the bk.
The code is pretty clear. Here's a snippet that deals with recent charges. Note the specific use of the word luxury.



(i) for purposes of subparagraph (A)--

(I) consumer debts owed to a single creditor and aggregating more than $500 [$500 (added by BAPCPA 10-17-05)] for luxury goods or services incurred by an individual debtor on or within 90 days before the order for relief under this title are presumed to be nondischargeable; and

(II) cash advances aggregating more than $750 [$750 (added by BAPCPA 10-17-05)] that are extensions of consumer credit under an open end credit plan obtained by an individual debtor on or within 70 days before the order for relief under this title, are presumed to be nondischargeable


Your lawyer can best advise in timing but, a cash advance to an insider is a preference payment. Does not matter why you are paying your friend. You'll need to wait at least 70 or more days for that.
Don't worry about making payments once the treatments are completed. If your lawyer advises waiting a few months so be it but, you won't need to wait 6 months or more.
Personally, I'd rather stick it to a cc company as opposed to local health care providers. Plus, while a hospital will have to treat you even if you bk them, individual doctors can refuse to continue to keep you as a patient. You may not want to burn that bridge.

[Bandit]

If you're going to file bk anyway, why are you worried about high balances and interest rates? It'll all get washed out in the bk.


Your lawyer can best advise in timing but, a cash advance to an insider is a preference payment. Does not matter why you are paying your friend. You'll need to wait at least 70 or more days for that.
Don't worry about making payments once the treatments are completed. If your lawyer advises waiting a few months so be it but, you won't need to wait 6 months or more.
Personally, I'd rather stick it to a cc company as opposed to local health care providers. Plus, while a hospital will have to treat you even if you bk them, individual doctors can refuse to continue to keep you as a patient. You may not want to burn that bridge.

Because, if the cards get to high too fast they will refuse me service just like the Doctor can because I wont be able to send the minimum payment to anyone. Then the next two Doctors I need to see, wont see me.
My current Doctor wants 100.00 a month but he is willing to take 30.00 a month. The hosptial wanted 1,000 a month but are willing to take $50.00. CC wont bargain that way. Do you kind of see what I mean?

It will be more than 70 days after paying my friend back with the courtesy check, so that part I think will be ok. Thanks for the code & for explaining better & that I wont have to wait 6months after all the treatments to get the BK rolling.

[Bandit]

I just had another thought on cash advance. We burn a lot of wood here through the winters and for the last 3 years I take a cash advance in September for about 1,200 and write the check to the people who bring the firewood. Only problem is they do not take credit cards. Check or cash only. I refuse to buy it anywhere else because there price for hardwood is 1/2 the cost of anywhere else.

If I do not get the cash advance for the firewood, I will be stuck with 2/3 more the cost for heating by natural gas. If I get the cash advance then it sounds like I will be screwed there again with this Bk thing even though I know this is cost of living expense & not a luxury.

Why are they so ridiculous about some of these things when you can prove exactly where the cash advacne funds went to?
Could I just write the courtesy check to the firewood company if they will accept it, even though it is from a CC?
It makes me not want to get the firewood, rack up a huge gas bill over the winter then throw that into the BK also.

I am trying to understand. Either I do not understand or else I am not explaining myself very well. Probably the latter.

[keepmine]

Bandit,

It's time to grow up and stop playing the "it's not fair game."
The reason there is a 70 day wait on a cash advance of more than $750 is to prevent people from just maxxing out the cc via a cash advance and then defaulting and filing bk in a short period of time. It gives the creditor the presumption of abuse should they wish to challenhe the discharge of their debt. This is life post bk reform and you just have to live with.
Ask the wood company if they will take a convenience check. If so, it would be like paying a utility bill with a cc-not a luxury.
You have to understand that in bk, there is a distinct difference between cash and everything else. For example, if your state exempts say $25k in equity in your home then, you're OK if you have that such in the value of your home. But, say you draw out that equity on the eve of filing then that cash is apt to be seized by the trustee even if the source was exempt.
Just play by the rules and try and not make sense out of some of them. Legislation can't be written to specifically address the individual situations that every bk filer might find themselves.

[BurgerKingVII]

and my attorney said, with a 13, doesn't matter. He had a guy do a $25K cash advances within 2 weeks of filing and nobody objected. The CC companies, he said don't really care to worry about it. I spoke to him last night. He said you'd think they would cry fraud but none of them do. He's been doing this 13 years and he said, not once has he seen it.

Before the October 2005 changes, cash advances on the eve of bankruptcy were generally a non-issue in a BK13 because of the BK13 "super discharge," which wiped out many debts that couldn't be discharged in BK7, such as those in the fraud category. So it's not surprising that your lawyer didn't encounter any objections of this type during the first 11 of those 13 years.

The new bankruptcy law significantly narrowed the super discharge, which no longer covers fraudulent debts. However, the creditor still has to object in order to avoid discharge, and I suppose it's possible that CC companies tend not to object in a BK13 and just settle for whatever they'll get as part of the plan. Whether this is actually the case or not, I don't know.

[Bandit]

Bandit,

It's time to grow up and stop playing the "it's not fair game.".

I am not playing a game & I am old enough to .....
If you can leave out those types of remarks I would appreciate it. This is reality for me & my questions and concerns are sincere. I want to do the best things to get through this, thus my questions.

The reason there is a 70 day wait on a cash advance of more than $750 is to prevent people from just maxxing out the cc via a cash advance and then defaulting and filing bk in a short period of time. It gives the creditor the presumption of abuse should they wish to challenhe the discharge of their debt. This is life post bk reform and you just have to live with.
Ask the wood company if they will take a convenience check. If so, it would be like paying a utility bill with a cc-not a luxury.
You have to understand that in bk, there is a distinct difference between cash and everything else. For example, if your state exempts say $25k in equity in your home then, you're OK if you have that such in the value of your home. But, say you draw out that equity on the eve of filing then that cash is apt to be seized by the trustee even if the source was exempt.
Just play by the rules and try and not make sense out of some of them. Legislation can't be written to specifically address the individual situations that every bk filer might find themselves.

I understand the 70 days, the part about equity, state exemption & taking that kind of cash & maxing out the cards. But that is not what is happening here.

While there might be a distinct difference between cash and everything else, there is no difference in the way you heat your house when it comes to paying up front, during or after. So in reality & with what you are saying, if I understand correctly, playing by rules in BK it is better to PAY AFTER (which wont happen) just throw the gas bill into the BK & forget the firewood. That will save me a lot of work and hastle this year.
So, I go from 1200 in firewood to heat this place to 5000 in natural gas with the furnace cranked.

Though, that sounds more like fraud as far as I am concerned because you wait to file/pay until spring knowing that you cannot pay it. Makes no sense but I did not make the BK rule.
I just saved myself $1200/$5000 & a week of hard work moving firewood going by the rules.

Thank you for your advice, keepmine.