how SOL am i?

[Ronguy1]

hello all. long time reader, first time poster. ill get straight to the point. i got laid off in early 2009 and called back to work early 2010. shortly after getting laid off i began using my credit cards..... until they were maxed out. then i quit paying on them. i havent made a credit card payment since about 09/09. after maxing them all out, and all the fees/interest began to build, im now sitting on top of $22,000 in credit card debt. i am 26 years old, with 2 kids, and make $30-35000 a year, depending on overtime, at my factory job. with my tax return this year, i plan on paying off my car, buying cloths and general things for around the house. no big toys or anything like that. i would also like to set aside some of the money to file bankruptcy. i'd like to file chapter 7, but am still undecided, since i know VERY little still.

which brings me here.... i was wondering, since i pretty much intentionally maxed out my credit cards, then quit paying on them, if theres a fair chance i'd be denied bankruptcy? my second question is, am i more likely to be approved for a chapter 13, then a chapter 7?

[tobee43]

ronguy1...welcome to the forum!!!

if i were in your position i would set up a few "free" consults with bk attys to discuss your situation...

if you are seriously thinking about it, it's best to sit down and get a "feel" to see if it's the right direction for you and yours.

also, most excellent atty's especially in the bk field take payments....it took us a bit over a year before we could file to pay off our atty. we just were that broke at the time. so i'm certain you will find someone to work with you, if you do decide to file.

best of luck!

[dneil]

I also intentionally used my credit cards, but I thought we would be able to get a second mortgage before things got as bad as they are. As long as you didn't max them out planning to not pay the companies back... then you are fine. credit cards have always been marketed as "Emergency" funds available. I think a lot of people used their credit cards for Gas, Groceries, school clothing, car insurance and such to "get by" during this economy. I don't think many of us expected for things to continue on the way they are (job loss, unemployment, company shutdowns).

Good Luck to you and your family

[tobee43]

I also intentionally used my credit cards, but I thought we would be able to get a second mortgage before things got as bad as they are. As long as you didn't max them out planning to not pay the companies back... then you are fine. credit cards have always been marketed as "Emergency" funds available. I think a lot of people used their credit cards for Gas, Groceries, school clothing, car insurance and such to "get by" during this economy. I don't think many of us expected for things to continue on the way they are (job loss, unemployment, company shutdowns).

Good Luck to you and your family

good point dneil...we used our cc's to the tune of 200k for medical expenses...we had no choice...none...so it's not like we went to europe or purchased a mink coat...or diamonds...it was life for us...the only thing we could do at the time.

[13for60]

If I may weigh in:

Intentional fraud is very difficult to prove. It is a subjective finding and has to be supported by a number of circumstantial factors. Honestly, everyone stops flushing money down the cc toilet at some point when filing for BK. We stayed current until the month before our filing date - and were maxed out big time. Just like everyone else, we were advancing some to pay for others, and paid more money to the cc machine that didn't add up to anything in the end.

Legally I was under the impression that there was a 90-day look back for cc charges. Those become priority claims (or so will be argued by the creditor) that need to be paid at 100%. Outside of the 90-day window, the cc companies have no recourse.

Hope this helps. But like Tobee said, Get thee to a Lawyer! The sooner you file the sooner you access the protection offered by Chapter 13.

--13for60

[ryan]

i havent made a credit card payment since about 09/09. after maxing them all out, and all the fees/interest began to build, im now sitting on top of $22,000 in credit card debt.

..another factor might be whether or not any of these creditors are suing you now, or about to. If not, you may not have any great urgency to file BK right now.

[debee]

Don't pay off your car until you talk to an attorney and/or get a better feel for your state's bankruptcy exemptions & schedules I/J. You'll want to be able to exempt the equity in your car in order to keep it out of the trustee's paws and you may want the car payment to reduce your income.

[LadyInTheRed]

i am 26 years old, with 2 kids, and make $30-35000 a year, depending on overtime, at my factory job. ... am i more likely to be approved for a chapter 13, then a chapter 7?

Sounds like your income is under median, so you could file a Chap 7. http://www.justice.gov/ust/eo/bapcpa...come_table.htm

Legally I was under the impression that there was a 90-day look back for cc charges. Those become priority claims (or so will be argued by the creditor) that need to be paid at 100%. Outside of the 90-day window, the cc companies have no recourse.

The 90 days is the time in which certain debts are presumed to be incurred by fraud, with no need to prove fraud. After the 90 days, the creditor still has recourse, but would have to prove fraud. As you point out, proving fraud can be difficult.

For detailed info on "exceptions to discharge" see bankruptcy code section 523: http://www.law.cornell.edu/uscode/us...3----000-.html.

[bcohen]

The 90-day "lookback period" is from the date you file for bankruptcy, not the date of last payment on the debt(s) you seek to discharge. Anything purchased during this timeframe, i.e. within the 90 days preceeding your bankruptcy filing will be looked at with a fine-tooth comb, and anything that is non-essential may be flagged by the creditor(s) and presumed to be non-dischargeable. The theory is that 90 days before filing for bankruptcy, a reasonable person would know that they are insolvent and bankruptcy is inevitable, so any debts taken on during this timeframe (if for anything other than absolute necessities such as food, rent, and medical) were taken on without the intent or ability to repay, and are therefore fraudulent and non-dischargeable.

There is also a 6-month "lookback period", again from the date you file for bankruptcy, during which the creditor(s) may examine your purchases and--if they choose--file an adversarial proceeding to try and have a portion of the debt deemed fraudulent and non-dischargeable. This would normally only occur if you purchased a very expensive luxury item, such as a plasma TV, jewelry, etc. during the 6 months prior to filing, or took out significant cash advances. Purchases of normal and essential items such as groceries, prescriptions, doctor's bills, etc would not be flagged as "fraudulent" even if the dollar amount is very high.

In any case, you quit paying on the accounts back in September of 2009--more than 14 months ago--so even if you filed for bankruptcy tomorrow, you are way beyond any "lookback period" for presumption of abuse. Therefore, the creditor(s) would really need an ironclad case to prove fraud--such as if you took out many large cash advances that could not possibly have been for normal living expenses--before they'd even dream of bringing an adversarial proceeding.

So the bottom line is that you have nothing to worry about. As long as you're sure that your job is secure, BK the debts away!

[chrisdfw]

Everybody that has maxed out credit cards does so intentionally. We don't accidentally use our credit cards. We use them to live, we buy stuff. It only becomes fraud if you do so with no intention of paying it back. The best way to avoid that is to wait a little while.

I doubt you will have a problem, but don't pay off your car before talking to an attorney.

[AngelinaCatHub]

Everybody that has maxed out credit cards does so intentionally. We don't accidentally use our credit cards. We use them to live, we buy stuff. It only becomes fraud if you do so with no intention of paying it back. The best way to avoid that is to wait a little while.

I doubt you will have a problem, but don't pay off your car before talking to an attorney.

I strongly agree with this poster. If you pay off the car, it becomes an asset and is meat for the trustee to take. Here is where a loan is good. Keep it encumbered and if you intend and can afford to pay the loan for the car, keep paying on it as it is secured debt. Even reaffirm if you have to, to protect it. I don't usually agree in reaffirmations but this too will protect it from becoming an asset.

Also it is so true that we become the "cashless society" with the credit cards and it IS easy to max them out without realization that the money comes from somewhere and needs to be put back some day. Otherwise, bk. The deal with bk is: "HAVE YOU LEARNED YOUR LESSON?" If so, you will see how wonderful no debt and a cash only system will make you feel free. 'Hub