Not intending fraud not wanting to file & home remodeling charges

[Notmeplease]

Thanks Katty for your honest opinion. I don't see how I could have preferential payments if I don't pay a creditor more than $5800 during the preceding three months before I file. Remember, I would have a non-consumer filing, my limits are higher than a consumer bk.

My husband is the one with the judgments, not me. I have two possible lawsuits against me. One has filed and I am disputing it and have filed a counter-claim. No judgement on the horizon, in fact he might end up owing me money. The other one hasn't attempted collection and may never do so, as the statute of limitations is running and every day brings that day closer. I make enough money to support my family. I'm not destitute. I'm not taking out loans with the intention of never paying them back. I am doing everything that I can to not file bankruptcy and I'm winning, so far. A BK in my future is definitely not guaranteed. BK would be the easy way out and had I wanted to take that path, I would have done so two years ago, instead of going through all of the stress I have had to live through trying to stay out of BK.

I am, however, the type of person that always plans for the worst so that my life doesn't fall apart if the worst happens. If, and that is a big if, some bad things happen, I, as well as everyone else out there, could be in a position that they would have to file bankruptcy some day. I am preparing for that situation so that if it happens I will be able to file. Part of that preparation is information, and meeting with bk attorneys is how to obtain information on the bk process. Those meetings have also helped me make the decision not to file. This stinks of fraud to you? I hope others have a different opinion.

I also am the type who refuses to cower in the corner because one day some bad things might happen. Bankruptcy is a snapshot of one day in your life, and a look at what you've done for the 90 days preceding that day. BK isn't in my foreseeable future and I'm not beginning a 90 day countdown. Today I should be able to live life as I want. If I want to take out loans to remodel my underwater house, I should be free to do so. I don't use credit cards to fund my daily living expenses. These charges are a one time occurrence for a particular purpose, and they are not so huge when my yearly income is taken into consideration. If some day I decide to file, it will be because I am truly bankrupt with judgments against me and I will have seen that coming for at least the prior 90 days.

But I do thank you for your opinion. It's helpful to see how people interpret what's going on in my life. I know that I am an honest person and am not trying to defraud anyone. You don't know me, so I realize it's difficult to judge from a few comments on a message board.

[Notmeplease]

Sorry, this posted twice, no way to delete it.

[newbie2]

I also am the type who refuses to cower in the corner because one day some bad things might happen. Bankruptcy is a snapshot of one day in your life, and a look at what you've done for the 90 days preceding that day. BK isn't in my foreseeable future and I'm not beginning a 90 day countdown. Today I should be able to live life as I want. If I want to take out loans to remodel my underwater house, I should be free to do so. I don't use credit cards to fund my daily living expenses. These charges are a one time occurrence for a particular purpose, and they are not so huge when my yearly income is taken into consideration. If some day I decide to file, it will be because I am truly bankrupt with judgments against me and I will have seen that coming for at least the prior 90 days.

.

Actually, bankruptcy is more than a snapshot of your financial house on the day you file and the previous 90 days. There is also a property transfer look back period that can peek back at your history for 2 years, an income look back for the previous 6 months, etc. I know you are talking about filing a non-consumer bk, and while there isn't a means test you must pass in order to do this, it may open more worms from the can than a consumer bk. (APs from your non-consumer creditors, more detailed look at your finances and history, etc.) If it were me and I knew I had one lawsuit pending, another possibly on the horizon, and already meeting with an attorney to discuss options, I would be very careful about spending habits (and creating more debt.) But that's me. It sounds like you have it all worked out in your head as to what is acceptable and are comfy within your own skin and sleeping well.

[Flamingo]

Thanks Katty for your honest opinion. I don't see how I could have preferential payments if I don't pay a creditor more than $5800 during the preceding three months before I file. Remember, I would have a non-consumer filing, my limits are higher than a consumer bk.

My husband is the one with the judgments, not me. I have two possible lawsuits against me. One has filed and I am disputing it and have filed a counter-claim. No judgement on the horizon, in fact he might end up owing me money. The other one hasn't attempted collection and may never do so, as the statute of limitations is running and every day brings that day closer. I make enough money to support my family. I'm not destitute. I'm not taking out loans with the intention of never paying them back. I am doing everything that I can to not file bankruptcy and I'm winning, so far. A BK in my future is definitely not guaranteed. BK would be the easy way out and had I wanted to take that path, I would have done so two years ago, instead of going through all of the stress I have had to live through trying to stay out of BK.

I am, however, the type of person that always plans for the worst so that my life doesn't fall apart if the worst happens. If, and that is a big if, some bad things happen, I, as well as everyone else out there, could be in a position that they would have to file bankruptcy some day. I am preparing for that situation so that if it happens I will be able to file. Part of that preparation is information, and meeting with bk attorneys is how to obtain information on the bk process. Those meetings have also helped me make the decision not to file. This stinks of fraud to you? I hope others have a different opinion.

I also am the type who refuses to cower in the corner because one day some bad things might happen. Bankruptcy is a snapshot of one day in your life, and a look at what you've done for the 90 days preceding that day. BK isn't in my foreseeable future and I'm not beginning a 90 day countdown. Today I should be able to live life as I want. If I want to take out loans to remodel my underwater house, I should be free to do so. I don't use credit cards to fund my daily living expenses. These charges are a one time occurrence for a particular purpose, and they are not so huge when my yearly income is taken into consideration. If some day I decide to file, it will be because I am truly bankrupt with judgments against me and I will have seen that coming for at least the prior 90 days.

But I do thank you for your opinion. It's helpful to see how people interpret what's going on in my life. I know that I am an honest person and am not trying to defraud anyone. You don't know me, so I realize it's difficult to judge from a few comments on a message board.

Again, with all you have posted about your situation and all your concern about what your future holds as to this situation and what could or may not occur, the only way to avoid problems is to sit down with a financial counselor/planner and go over your entire matter as you need professional help in that area if you want to avoid filing. Continuing to charge home remodeling expenses in your current situation is like lining up the matches to start the forest fire and I think you know it. Plus you are concerned of your financial reputation as a contractor so if you do file you know the impact that would have on your work and depending on whatever contract or agreement you have with those you contract with, there may be clauses in there that if you file bankruptcy. It may need to be reported and/or it could jeopardize your contract. Get some professional financial planning advice.

[Freddy03]

Thanks Katty for your honest opinion. I don't see how I could have preferential payments if I don't pay a creditor more than $5800 during the preceding three months before I file. Remember, I would have a non-consumer filing, my limits are higher than a consumer bk.

My husband is the one with the judgments, not me. I have two possible lawsuits against me. One has filed and I am disputing it and have filed a counter-claim. No judgement on the horizon, in fact he might end up owing me money. The other one hasn't attempted collection and may never do so, as the statute of limitations is running and every day brings that day closer. I make enough money to support my family. I'm not destitute. I'm not taking out loans with the intention of never paying them back. I am doing everything that I can to not file bankruptcy and I'm winning, so far. A BK in my future is definitely not guaranteed. BK would be the easy way out and had I wanted to take that path, I would have done so two years ago, instead of going through all of the stress I have had to live through trying to stay out of BK.

I am, however, the type of person that always plans for the worst so that my life doesn't fall apart if the worst happens. If, and that is a big if, some bad things happen, I, as well as everyone else out there, could be in a position that they would have to file bankruptcy some day. I am preparing for that situation so that if it happens I will be able to file. Part of that preparation is information, and meeting with bk attorneys is how to obtain information on the bk process. Those meetings have also helped me make the decision not to file. This stinks of fraud to you? I hope others have a different opinion.

I also am the type who refuses to cower in the corner because one day some bad things might happen. Bankruptcy is a snapshot of one day in your life, and a look at what you've done for the 90 days preceding that day. BK isn't in my foreseeable future and I'm not beginning a 90 day countdown. Today I should be able to live life as I want. If I want to take out loans to remodel my underwater house, I should be free to do so. I don't use credit cards to fund my daily living expenses. These charges are a one time occurrence for a particular purpose, and they are not so huge when my yearly income is taken into consideration. If some day I decide to file, it will be because I am truly bankrupt with judgments against me and I will have seen that coming for at least the prior 90 days. But I do thank you for your opinion. It's helpful to see how people interpret what's going on in my life. I know that I am an honest person and am not trying to defraud anyone. You don't know me, so I realize it's difficult to judge from a few comments on a message board.

In my opinion you understand what BK is and what it can do. I do think you are looking for someone here to tell you it's ok to run your credit cards up (regardless of the reason) before you file BK. I also think you know that your income is going to change soon. If it was not then why are you worried?? Also the amount being charged compared to your income has nothing to do with AP. You have charged 20K already and talking about adding another 10K that is not a few times eating out or getting gas.

I agree with a few others - it stinks of fraud to me too.

[discombob1]

Notmeplease, I think the bottom line is that the fears you expressed are well founded. I won't give an opinion on your spending habits, you've gotten plenty of those. But if you file you will not breeze through. If you choose to not re-affirm the debt, you face at a minimum an Adversary Proceeding. Read that section of the forum, they are ugly and expensive. You may be able to settle with that creditor for a lower lump sum amount but it will cost a ton of legal fees. And there is a chance your case would be dismissed, just less likely. Another thing to keep in mind, your husband has a failed business. It's not unheard of for bitter ex-partners or ex business contractors to stir up trouble for you if you file just for spite. There are horror stories like that on the forum. So for you to continue to charge then file... yes, you will have trouble. There is no magic time frame unless you wait 2 years as you have said and pay those cards off first.

[Brasky]

Well, if the credit card use is outside of 90 days before filing, the card was not obtained through fraud, and the individual intended to pay the debt back, the credit card debt for remodeling the home should be discharged. It sounds like the person asking the question is planning on paying the card back. I think they stated, "My plan is to pay off the credit cards in two years." Obviously people may lie about their intent, but it at least this is some evidence this indivdiual plans on repaying the debt.

However, I agree that any use of credit before filing may tend to look suspicious and may result in your case being examined with greater scrutiny. It is probably best to avoid all credit card use if you are contemplating bankruptcy.

[Notmeplease]

Hi Brasky. Thank you for your reply. You wrote "Obviously people may lie about their intent, but it at least this is some evidence this indivdiual plans on repaying the debt." If this BK ever materializes there will be many months of payments on the credit cards. It's not only an intent, but will be a documented effort at repayment.

I also don't have anything to hide if the Trustee decides to look back two years, so I'm not concerned about that. We're not hiding any assets, the business assets were all repossessed by the bank and we haven't made any preferential payments to relatives or business associates. We use a debit card and online bill pay for all transactions so there is a clear record of where the money goes each month.

[Chowder]

Paying for a kitchen remodel while ignoring or shorting another creditor can still be preferential. But that would not effect you directly anyway. The Trustee just goes after whoever you paid.

If you're laying in whatever the latest "in" appliances during that kitchen remodel, it may be hard to persuade a Trustee that it's not a luxury purchase.
Hopefully when you do file, and it sure as poop looks like you will be, your Attorney will have a good working relationship with the Trustee.
Good luck.

[Brasky]

The luxury presumption of non-discharability only applies within the 90 day window. And even in this window doesn't necessarily mean debts are non-dischargable. All it means is that in this window it is up to debtor to prove they are not luxury. Further, outside the 90 day window I don't think it really matters if they are luxury purchases or not. There is no exception to discharge which states if you buy luxury goods they are not discharged. Hypothetically, the value of the remodel will be reflected in the value of the home. Therefore, if the house is over the exemption amount, the trustee will be able to recover the money.

And even if you buy really expensive luxurious goods without fraud etc, as long as you can prove what you did with the asset or where the asset went and that there was no fraud in getting rid of the asset, you will recieve a discharge.

For example, one couple used loan money to buy a crap load of cocaine, which they smoked or snorted or whatever. The met their burden of proof that the loan money went into the cocaine and still recieved a discharge on the debt used to buy it.

[rustymich]

Agreed

[rustymich]

I agree here

Just my opinion, if you can't afford to pay off any of the current debt you have previously personally guaranteed, you should NOT be out charging up credit cards to those levels. Those are some MASSIVE purchases at $20,000+ It stinks that it's business debt, but the fact is, it's YOUR debt since you personally guaranteed it at some point. If anyone looks into this situation, and I'm not saying they will, but you might have some major problems, especially since you had previously had papers drawn up, then went out and charged up your cards.

[LadyInTheRed]

I make enough money to support my family. I'm not destitute.

You do not make enough to support your family if you have to use credit to make necessary repairs to your home. There's a difference between being destitute and bankrupt. I am far from destitute. But, I am definitely bankrupt. Your desire to try to avoid bankruptcy may not be the wisest decision. I wouldn't be surprised if you come back here 2 years from now saying you are finally going to file and wish you had filed when your attorney first suggested it. I wish you luck and hope you prove me wrong.

I take you at your word that you fully intend to avoid bankruptcy and pay off the charges. But, the fact that you don't have fraudulent intent does not prevent a creditor from filing an adveserial proceeding. Either does the passage of time. If an AP is filed, the best case scenario is that you have to spend a lot of money fighting it, but win and the debt gets discharged. The worse case scenario is you spend a lot of money fighting it and the creditor wins and that debt doesn't get discharged.

Take Flamingo's advice and sit down with a financial planner or counselor.

[AngelinaCatHub]

Hi Brasky. Thank you for your reply. You wrote "Obviously people may lie about their intent, but it at least this is some evidence this indivdiual plans on repaying the debt." If this BK ever materializes there will be many months of payments on the credit cards. It's not only an intent, but will be a documented effort at repayment.

I also don't have anything to hide if the Trustee decides to look back two years, so I'm not concerned about that. We're not hiding any assets, the business assets were all repossessed by the bank and we haven't made any preferential payments to relatives or business associates. We use a debit card and online bill pay for all transactions so there is a clear record of where the money goes each month.

A planned/orchestrated bankruptcy is FRAUD. There is nothing wrong when you realize you are over your head, to organize or plan the best way to bk.

When you "plan and orchestrate" a bankruptcy to capture funds that you know will be discharged in bk, and then plan to work the system by thinking you have time enough to spend a bit more doing this or that with other people's money, this will surely be detected.

A dismissal of a bankruptcy is just one step below a lawsuit, and an AP within a bankruptcy will ruin you.

Your first post stating you don't intend to commit fraud is the tip-off of the fact that you intend to exactly do that, in every post you have made. You have two pages of resources here telling you not to do what you argue will be right and good for you. So, DO IT. Don't come back for more advice once you get yourself into a worse mess.

We have all seen this before. 'Hub

[mrsotaguy]

"a BK attorney can only work with you if you are insolvent" .. Not true. You do not have to be insolvent to file BK. The equity you have in your home, up to the maximum allowed by your state, and exempt property under the code, are protected assets. These can be greater than your debts. If that is the case, you are not insolvent. If your diminished ability to pay those debts are within the parameters of the means test, any competent BK attorney will certainly handle your case.