New here with questions!

[CCsSuck]

1) If you are using CCs to survive, you may be closer to BK than you think. I was caught in that death spiral myself. If your minimums are so high that you can't pay them *and* afford groceries, you need to stop paying the CCs and have a life. Pay your living expenses first, then divide whatever is left among the CCs. I know it feels wrong, but the reality is that you can't afford the CC payments on your current income.

2) A consultation is not a waste of an attorneys' time, whether you take their advice or not; whether you end up engaging them or not. Good BK attorneys offer free consultations so that you can take the time to select the right attorney for you - and it's also their chance to demonstrate that they know their stuff and have your best interests at heart. I recommend interviewing at least 3 and ask them what they think your best options are. They may have some creative ideas about the loan that you owe to your friend as well.

My concern is mainly that I am paying somebody back quite a bit of money and that's a friendship I don't want to destroy by having her sued by the trustee, much less risking my BK getting thrown out, so I'm forced to wait. Since I know I have to wait, if I see a lawyer now and then wait to retain him, the trustee could inquire about when I saw him and then it would look like I was planning this all along and could open up a whole other bag of worms.

I have pretty much decided that I'm going to stop paying my BofA card this month and let the cards fall as they may, but I owe them 14k, and have a whole lot of anxiety over them getting a judgment against me. I mean, if I were them, I'd sue me, too, lol. But now I am reading that the issues I am concerned with putting off a bk could still haunt me when they get a judgment and I feel pretty trapped. At the end of the day, though, its around $350ish a month that I could be using for food and other essentials, plus it'd let me breath a little again.

[BKlooker]

I really do feel for you, CC. It sounds like you are in a real bind. How much money do you have left to pay back to this friend (how much was it in total)?

I agree with someone else though, you should not rule out seeing an attorney who can give creative advice for dealing with the issue with your friends loan repayment, as it sounds like this is the primary reason you are putting off filing. Do a couple rounds of free consultations with some attorneys and see what they offer. If after a few meetings, you very well may find one that can provide some form of legal work around to that situation.

If all else fails, you can simply inform your friend that the money will need to be given back BUT there is nothing stopping you from setting up to repay that debt after your BK is discharged. In other words, what's the problem with simply agreeing to pay the friend back in a settlement agreement or promissory note after the BK is over?

I am not a lawyer....but if I can come up with that, there has to be a few actual lawyers out there who know the law well enough to get you over this hurdle. It just sounds like filing a BK as soon as possible is the best option for your financial future. If all the attorneys tell you there is no way around it, then move forward from there....but don't assume it's as black and white as it sounds. Where there is a will....

[LadyInTheRed]

You really should see an attorney. The fact is, you are insolvent because you cannot pay your minimum debt payments and still pay your living expenses without using a credit card. If a credit card company wants to go after you for fraud, they don't need a visit to an attorney to prove that you are insolvent and knew at the time of a charge that you couldn't pay the debt. Besides, you would have to charge an awful lot to a card to make it worth it for the credit card company to make trouble.

As already stated, it is possible the payments to your friend won't be a problem, especially if you have documentation of the loan and can prove you have been making regular payments.

From Bankruptcy Code Section 547:

(b) Except as provided in subsections (c) and (i) of this section, the trustee may avoid any transfer of an interest of the debtor in property—
(1) to or for the benefit of a creditor;
(2) for or on account of an antecedent debt owed by the debtor before such transfer was made;
(3) made while the debtor was insolvent;
(4) made—
(A) on or within 90 days before the date of the filing of the petition; or
(B) between ninety days and one year before the date of the filing of the petition, if such creditor at the time of such transfer was an insider; and
(5) that enables such creditor to receive more than such creditor would receive if—
(A) the case were a case under chapter 7 of this title;
(B) the transfer had not been made; and
(C) such creditor received payment of such debt to the extent provided by the provisions of this title.

(c) The trustee may not avoid under this section a transfer—
(1) to the extent that such transfer was—
(A) intended by the debtor and the creditor to or for whose benefit such transfer was made to be a contemporaneous exchange for new value given to the debtor; and
(B) in fact a substantially contemporaneous exchange;
(2) to the extent that such transfer was in payment of a debt incurred by the debtor in the ordinary course of business or financial affairs of the debtor and the transferee, and such transfer was—
(A) made in the ordinary course of business or financial affairs of the debtor and the transferee; or
(B) made according to ordinary business terms;

http://www.law.cornell.edu/uscode/usc_sup_01_11_10_5_20_III.html

Were the payments to your friend made in the ordinary course of your financial affairs? Or did you suddenly start making huge payments that you hadn't been making before?

As already suggested, if your attorney does say the trustee will likely pursue your friend for the money you've paid, talk to your friend ahead of time and tell him/her what is going on and that you will pay everything back after your discharge.

Despite your disclaimer at the beginning of the post, I think you know you are going to file BK eventually. Don't worry, trustees are too busy to waste their time reading these boards and trying to match up our descriptions of our situations with the hundreds of new BK filings they see everyday. You are best off seeing an attorney now to help you plan, help determine whether you really need to wait to file and to tell you to stop wasting your money paying dischargeable debts and use the money for your living expenses and attorney fees instead.

[researchnerd]

There's no bag of worms to open. First, I don't know why a trustee would ask about the dates you first consulted with an attorney. Second, even if they did, there's nothing wrong with evaluating your options before having to make a big decision like BK. In fact, it could make you look more conscientious because you are actively looking for the best solution to a rotten situation, well ahead of the time you need to decide.

Don't forget....bankruptcy is legal. A lot of people approach it like it's a dirty little secret, or they're getting away with something. It should be treated as a last resort, but it's an effective and valid solution when there is no other way out.

Free consultations with knowledgeable BK attorneys are your best bet right now. Seriously. Even if you decide not to file, at least you will know you aren't leaving any options unexplored.

[CCsSuck]

Thanks for the thoughts. The person that lent me the money is my boss, friend, and sister in law (though, their marriage isn't recognized in my state, so I don't know what that makes her in the eyes of the law, lol). In any event, she's certainly an insider.

I borrowed around 9 grand to buy a house in November '09. She was paid back in March '10. I got the money for this from my tax refund (the homeowners tax credit would have been great if I got to keep some of it, lol) and from the lapse between closing and when my first mortgage payment was due.

Then I borrowed a grand for a down payment on a car, and paid her back in May '10.

About 6 months after I bought the house my ac died, and I borrowed 4 grand to replace that. I still owe her roughly $2,375. The unit qualifies for the rebate so when tax time comes along I should get $1,200 for it plus whatever additional refund I might get (usually a few hundred dollars). Unless of course, BofA gets a judgment before then and takes the whole thing. I think its unlikely, but its still a worry in the back of my mind.

Anyway, I'm thinking of using some of the money I save by not paying BofA to pay her down a little bit, but realistically, April is the next month that I get paid 3 times, so she won't be paid off until then. So the year wait for BK would have to start then if I do go that route. I really don't want the trustee to see that I had a refund for nearly $8,500 that I took out in cash with no "proof" as to where it went. Yes, I was likely considered insolvent before that, and even when I had the money in my account, with all my debt, I still would have been considered insolvent. Nonetheless, I'd rather have a return for around $1,500 and a return for a few hundred for him or her to look at with a lot less scrutiny.

In any event, that's all fantasy land for now, because if BofA gets a judment before a year has past since I pay her off, it looks like I could have some serious problems. Sigh.

I think I may give talking to a laywer some thought, but it seems pretty cut and dry in my head -- I almost wish I haven't done all the reading I already did, lol.

[LadyInTheRed]

It sounds like the last time you paid her was May '10. Is that true? If so, don't pay her anything else and file in June. The chance of BoA getting a judgement and garnishing wages and accounts by then is small, but I'm not familiar with FL court procedures and how fast things move. If you file your tax returns early in the year, you will be able to keep your refund out of BoA's hands. Based on what I've read here, they aren't going to sue before your are 90 days delinquent and will likely wait longer than that. Use the tax refund to pay your BK attorney and for living expenses. If BoA sues you and gets close to a judgement before you file, withdraw whatever money is left. If you you still have too much of the refund on hand at the time of filing to exempt the cash, make an extra payment on your mortgage or contribute to an IRA. Your friend/sister-in-law/boss should understand if you explain what is going on and tell her you will start paying her again as soon as you are discharged. Also, any payment under $600 is not deemed a preferential payment. So, you just need to make sure you haven't paid $600 within a year of filing.

Just some thoughts from a non-attorney. Run this past 2 or 3 attorneys in initial consultations.

[CCsSuck]

It sounds like the last time you paid her was May '10. Is that true? If so, don't pay her anything else and file in June. The chance of BoA getting a judgement and garnishing wages and accounts by then is small, but I'm not familiar with FL court procedures and how fast things move. If you file your tax returns early in the year, you will be able to keep your refund out of BoA's hands. Based on what I've read here, they aren't going to sue before your are 90 days delinquent and will likely wait longer than that. Use the tax refund to pay your BK attorney and for living expenses. If BoA sues you and gets close to a judgement before you file, withdraw whatever money is left. If you you still have too much of the refund on hand at the time of filing to exempt the cash, make an extra payment on your mortgage or contribute to an IRA. Your friend/sister-in-law/boss should understand if you explain what is going on and tell her you will start paying her again as soon as you are discharged. Also, any payment under $600 is not deemed a preferential payment. So, you just need to make sure you haven't paid $600 within a year of filing.

Just some thoughts from a non-attorney. Run this past 2 or 3 attorneys in initial consultations.

Sorry, I didn't realize I left that part out, lol. The last payment I made to her was for $725 the beginning of this month.