question about overstated income

[mgs0987]

Hi,

I am planning on filing bankruptcy but have been too chicken to go through with it just yet as I have soo many worries....its seriously making me sick..can't eat, can't sleep....anyways..

I am about to turn 23 and am over 30k in credit card debt....probably close to 40k actually. When I applied for most, if not all of these cards the applications asked for "total annual HOUSEHOLD income" I make 34k/year at my job but I always entered between 100,000-110,000 on credit card apps because I live in an apartment with 2 other people who make roughly the same as I do...so, thats where I got those figures from. I am worried sick that when I go to file the trustee and the creditors will bring raise that issue.

uncontrollable spending got me into this mess. Trading one car for another time and time again and placing the down payment on a charge card, eating out almost every night of the week, gas, clothes, car insurance, cell phone...basically anything i could put on a card I did. I have not missed any payments on anything ever...never took cash advances from credit cards, however I did have to take a month off of work unpaid to assist my mom recover from a couple surgeries she had. about 2 months ago I used a balance transfer check from capital one and wrote it out to myself for 3,500.00 to cover my living expenses while i was out of work. I know i need to wait awhile before filing and i do plan on continuing to struggle for the next 5-6 months to make payments so it doesn't appear to be fraudulent when I go to file bk ch 7. I am considering closing every single one of my credit cards right now to prevent me from charging even more. I just want this nightmare to be over with. I made my bed now its time to sleep in it. What should I do? Should i be concerned about the overstated income? how long should I continue to make payments before I file?


I never want to even see a credit card after this is over with...I'll be too busy working to pay back over 65k in student loans. Sorry this is so lengthy...I'm just very scared and confused. I posted on here a few months back and have STILL continued to CHARGE almost everything! its a serious problem for me and it has got to stop NOW. I'm seriously taking the scissors to every single card as soon as I post this...

Thanks for any and all advice I truly do appreciate it and have gained a wealth of knowledge from browsing around the forum.

[Dougie011]

I think if your going to file I would stop paying the credit card bills and put that toward living expenses and saving for an attorney. If you are filing, you HAVE to Stop using credit cards. Good luck.

[mgs0987]

I dont think I should just stop paying right now. I just maxed everything out for the most part..a couple cards have zero balances and ill just cut those up and see if they are still open after i get my discharge...and if they do i'll definitely be reducing the limts to 100.00 or so.

Anyone have a similar situation? I'm more so worried about the overstated income and the recent large transactions. I had to put a large amount (over 2k) on a credit card a few months back to for a medical bill....ugh.

I will be so glad when this is all over with.

[keepmine]

A medical bill isn't a luxury item so, I'd not worry about that.
If it's been a few years since you opened the cards and have a good on time payment record the stated income won't be a problem. Actually, if it asked for HH income and didn't define who makes up a HH I don't see how this could be fraud. I'd make minimums on the card with the recent $3500 cash advance for 6 months or so and just let the other cards go.
As another poster suggested, get used to living on cash.

[mgs0987]

will the trustee see exactly what was charged or just the amounts? reason I ask is that for some reason the past few months i really just didn't care how much i charged so it appears that i went on a charging frenzy from like february until now. only real "luxury" item i purchased was a couch and a loveseat for like 550 bucks at a discount furniture store back in april on my discover card. I just don't want the trustee to humiliate me and question every little charge.

[LadyInTheRed]

The trustee will only see the amount due to each creditor. The details of the charges will only be looked at if a creditor objects to the dischargability of the debt. The worse thing that can happen regarding your recent charges is that they will not be discharged. Here's the law regarding what is not dischargeable:

(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by—
(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition;
(B) use of a statement in writing—
(i) that is materially false;
(ii) respecting the debtor’s or an insider’s financial condition;
(iii) on which the creditor to whom the debtor is liable for such money, property, services, or credit reasonably relied; and
(iv) that the debtor caused to be made or published with intent to deceive; or
(C)
(i) for purposes of subparagraph (A)—
(I) consumer debts owed to a single creditor and aggregating more than $500 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 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; and
(ii) for purposes of this subparagraph—
(I) the terms “consumer”, “credit”, and “open end credit plan” have the same meanings as in section 103 of the Truth in Lending Act; and
(II) the term “luxury goods or services” does not include goods or services reasonably necessary for the support or maintenance of the debtor or a dependent of the debtor.

http://www.law.cornell.edu/uscode/html/uscode11/usc_sec_11_00000523----000-.html

If you put 90 days between your last charge and your BK filing, there will be no presumption of fraud. That doesn't mean a creditor can't object to dischargeabilty saying you incurred debt without intent to pay. But, without the 90/70 day presumptions, that is very hard to prove.

I agree that your statement of income will not be a problem. You stated your household income as you interpreted the term.

So, did you tear up your cards?

[mgs0987]

wow thanks for the information! and yes, I shreded the f**k out of those things. Well, four of them I only cut in half and locked away in my drawer...they are the cards that I don't owe a balance to and want to see if they will survive the bankruptcy just for kicks. Anyone have any idea if these cards will survive?

Kohls 2,000
best buy rewardzone mastercard 300.00
walmart 475.00
toyota visa 500.00

Kohls is ran by chase and I DEFINITELY owe chase my soul so I'm guessing it will be closed

bestbuy is HSBC and I have a card with them that I owe over 4 grand on

GEMB i don't owe them anything at all...same with toyota.

[mgs0987]

i'd be happy if just the walmart card survived. I don't shop at walmart very often, the limit is small and it would help me to rebuild credit. I'm not even worried about that though, I have student loans that can help me rebuild and I *might* reaffirm my car loan...not sure yet.

[Exployer1234]

If you are planning on truly filing in the next 6 months I would stop paying your credit card bills. I did not make a payment for over a year on my CC's. At this point if you continue paying your CC's and you are filing for BK then you are wasting your money paying on them. The reason being is your CC's will be discharged in BK and the amount's will not matter. If you receive a judgement it will take about 6 months before that company will even get a chance to start garnishing your wages. even if they sue you on the 4 month mark it will take another 30-45 day mark before the garnishment would go through. At that point you can file BK. Your credit score will go back up once you are discharged, so if you are worried that your credit score will be affected by not paying your CC it will go back up. I have seen people get out of BK with a 650-680 FICO score.

One thing to remember about BK is it should be used as a last resort and you should give yourself a fresh start. First you need to learn how to live on cash. That means no more credit cards. Secondly your student loans are not discharged and in some cases they will enter into a default mode once BK occurs. After BK you may have to ask your student loan company to report timely payments.

Basic rule of thumb is learning to live within our means. When this happens you know that BK will be helpful in your situation. If you think about getting CC's straight out of BK it can set you back to having more debt. That is one reason that some people have to file twice in their life. I filed BK 12 years ago and I just filed BK again. The first time around I admit I did the same thing you did. The second time around was a different situation though. I lost my job and had lots of medical debt. There will not be a third time in my future. I have learned to live within my means. I have not used a CC since 2008. If I ever do get another CC it will be a long time from now, and I will pay the amount off. I do not ever want to run a balance on a CC for mor then a week.

Good luck on what ever you decide.