Court Considers 12 Facts In Judging Objections To Discharge

[bkfiler]

This list of rules is used most often to determine if you are going to get your debt discharged if an objection is made. Remember, that before that happens you will most likely get a call to your attorney from your creditor trying to get a settlement before they have to try to prove in a court trial you knew you were going to file BK.

(you know, thats when they point out the large cash advance happened after you hired your attorney to take your bankruptcy case lol)

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Intent to deceive may be proven by circumstantial evidence. The following nonexclusive list of factors are considered by the court:

1) the length of time between making the charges and filing bankruptcy;

2) whether an attorney had been consulted concerning filing of bankruptcy before the charges were made;

3) the number of charges;

4) the amount of charges;

5) whether multiple charges were made on the same day;

6) whether the charges were above the credit limit on the account;

7) whether the purchases were for luxuries or necessities;

8) a sharp change in the buying habits of the debtor;

9) the debtor's financial sophistication;

10) the financial condition of the debtor when the charges were made;

11) the debtor's employment circumstances; and

12) the debtor's prospects for employment.

[sunshine08]

Now you give me the list, after I have been discharged. That is something "YOU" would do.




Just joking, mine over but it is good info for the newcomers and can really answer many of their questions.


See what happens when you take you time and use it constructively.

[bkfiler]

and which rules on the list did you break?

[Graphic]

I possibly broke a few. I bought about 900 bucks worth of 'luxury' items back around july..(best buy). TV, and computer monitor. I could plead for the monitor because i needed that for school..the tv though i donno. Even though its few months away I wonder if they'd object. If so, no biggie because best buy is my favorite store ever anyways so I wouldn't feel as bad paying them.

[bkfiler]

oh so your sense of responability is stronger for those you feel attraction for. now that is sick!

anyway, i felt like paying my victoria secrets card so that i could still use it in front of dates like i am 'da man!' so i know what you mean

[sunshine08]

We didn't break any.
We did the debt consolidation thing. Paid them about 27 months, big bucks. Then flip flopped over the bankruptcy issue, tried to get a second mortgage, glad that didn't work though.
But, we could have broken several if we had not done the debt consolidation thing............. Maybe that is why some of the companies barely worked with us......Hummmmmmm, that is a lot to think about...

[SinkingFast]

This list of rules is used most often to determine if you are going to get your debt discharged if an objection is made. Remember, that before that happens you will most likely get a call to your attorney from your creditor trying to get a settlement before they have to try to prove in a court trial you knew you were going to file BK.

(you know, thats when they point out the large cash advance happened after you hired your attorney to take your bankruptcy case lol)

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Intent to deceive may be proven by circumstantial evidence. The following nonexclusive list of factors are considered by the court:

1) the length of time between making the charges and filing bankruptcy;

2) whether an attorney had been consulted concerning filing of bankruptcy before the charges were made;

3) the number of charges;

4) the amount of charges;

5) whether multiple charges were made on the same day;

6) whether the charges were above the credit limit on the account;

7) whether the purchases were for luxuries or necessities;

8) a sharp change in the buying habits of the debtor;

9) the debtor's financial sophistication;

10) the financial condition of the debtor when the charges were made;

11) the debtor's employment circumstances; and

12) the debtor's prospects for employment.

re #1,........ We will dutifully wait

re #2,......... Stopped using cards. Seeking consults starting this week. Not with firm plans yet. Just gathering information to know our options.

re #3,........ How many is too many?? When you are buying groceries and gas, paying utilities, etc, on a rotation on the cards every month, for months. So is 20-30 charges on one card too many in a month??

re #4,......... Amounts varied. Mostly in $50 to $200 max range, except when I bought son's books for college. Oh, and we paid the first semester of tuition too.

re #5,......... Heck yeah there were multiple charges on some days. Groceries, gasoline, maybe a utility bill, or whatever. Then days would go by where no purchases were made.

re #6,......... No exceeding credit limits thus far

re #7,......... Almost all purchases were necessities. We did buy the kids a Christmas gift a piece. $100 price range each. Oh what a splurge!

re #8,........ There was a sharp change in charging behavior that started when hubby lost his job 18 months ago. More and more necessities being purchased using CC's that's continued since then and grew in volume as funds grew shorter and shorter

re #9,....... Well, I can't plan a budget and have never lived by one. Does that make me a financial zero??

re #10,........ Early on, our financial condition wasn't too bad. The more time passed, with increased expenses, it got worse and worse. Lately it's gotten rather bleak.

re #11,......... Hubby was gainfully employed. Laid off for 7 months. Found new job for lower pay, higher cost of benefits, outa state, required family to move. First hubby, then family followed later. Still gainfully employed, hovering right at the median income for our area according to the Means Test

re #12,........ Looks like Hubby will have a job, at least for the foreseeable future.

So how does it look like we score.

[jennga]

Guess that is why I was discharged and closed without problems, I didn't break any of the rules

[bkfiler]

sinkingfast, too little info to know. from what you state it seems ok though.

when were your last charges made?

what/when were your largest change made?

what/when were your last set of charges totaling over $500 made? and $1000?

when did you know you needed to file bk? what in your trail can prove this?

these things are only what the court looks at to see if they should fault you and make you pay a sepcific set of objected to charges. that is actually good news. before a creditor takes it to court they call your attorney first. try to settle.

thats where the games begin. the 12 facts to consider are what most attorneys use to determine if they will take your case or decide what to charge you to start with beleive it or not. your situation seems fine based on what i see.

if you can, then answer the others ones above and maybe we can determine more.

[FoolAndHisMoney]

3,4,5 are questionable. What if it's within 2 months before the holidays? I imagine most people make multiple charges on multiple cards all the same day doing holiday shopping. The credit card companies love this too!

#8 also is questionable. People simply use cards more when they have no money. That's what they tell us we can do.

I think the main factors would be the big one and that's #1, TIME! The longer, the better. The others (according to the DOJ report) is an enormous unsecured debt balance on a fast food joint salary. Especially if it was for major luxury purchases and the debtor has no assets to show for it.

[SinkingFast]

We really went over our finances during the Holidays. Between Christmas and New Years. Looking at it all and discussion options. I also started researching info on the the new BK Laws to learn what they were before and what had changed. That's where we learned about the CCCA requirement.

We discussed it and decided we wanted a professional opinion about our finances and advise about our options. We decided to try a DOJ approved agency. At least the gov't had screened them. We didn't go for a pre BK Cert. We just had an online counseling session. Enter info and wait for a response. The Counselor got back to us about 5 days later with a packet of info, some suggestions of things we could do, a lay out of a proposed DMP, etc. Based on the info in the packet, we decided to consult attnys about our legal options.

Since Christmas, I've used a CC maybe 3 times. At least that's all I can remember. Once for gasoline ($40-$50), once for groceries ($100), and I bought son's books for college (just under $500). Jan 11 was the last charge. That was the one for groceries. I got caught at the store, they had already rung it all up, and I realized I did not have my debit card. Daughter had taken it to the ATM to get $20 for her and sis for lunch money at school. I still can't write checks locally due to the fact I still don't have proper ID.

Christmas shopping wasn't much. One daughter wanted 1 thing. It was a purse for $135. Spent about the same on other 2 children. Daughter #2 got 4 things for the $135, a book bag, pen/pencil bag, and a couple CD's she wanted. Son got 1 thing as well. Something he needed for college. Hubby and I did not get gifts for each other again this year. It was not a big Christmas at our house.

We haven't really decided to file BK. We've got some consult appts set up over the next couple weeks to find out what attnys have to say. We're still weighing our options. And since we've been researching and learning, we are trying to prep our lifestyle in case that's what we actually do.

[bkfiler]

sounds like you are planning your bk. very nice.

remember that credit cousneling agencies seldom suggest you file bk. they dont make any money like that and think they have the best route to take.

if you can meet the guidlines and file a bk then that is the way to go. it gives you the fresh start without taking all your money to try to pay off people.

anything under $200 is minimal as long as it doesnt keep happening. however, consider stop paying your credit cards and save for your attorney and start paying cash to keep things from getting out of control again.

[SinkingFast]

sounds like you are planning your bk. very nice.

anything under $200 is minimal as long as it doesnt keep happening. however, consider stop paying your credit cards and save for your attorney and start paying cash to keep things from getting out of control again.

I just had a phone consultation with an attny. I spoke with his paralegal last week and gave her tons of info over the phone. So, he was already very familiar with our situation. I was impressed with how "personal" he was with our info. Not like we were a # to him at all.

In his opinion, if we stop paying our CC bills, that, in essence, could be seen as the point we decided to file BK. I told him if I pay the CC bills we have no money to live on. If we spend cash, we can't pay the CC bills. He said it won't hurt to go ahead and file then. I asked about the 70 day rule. I told him I charged on a CC one day last week. He said they could come back on us for charges over the new set amount, and cash advances over the new set amount. I asked if those were cumulative numbers or individual charges. The attny said, charges to ONE creditor in those amounts. That could be one $1250 charge/$500 cash advance, or a total of $1250 in charges/$500 in cash advances on each and every creditor. I told him we'd been using the CC's to buy groceries and such. There were a few "cash advances" in convenience checks I'd used last month to pay bills with. He asked if we had any charges over $200. I said one. Son's books fees. He didn't even really think that was a concern. He said he's never seen creditors come after someone for anything less than $2k. It's just not worth their time and trouble (translate that cost) for anything less than $2K. Plus too, they are looking for luxury items/purchases, not groceries and utility bills. Then he said, "So what if you have to pay son's book fees. Small price compared to paying all the bills for a couple more months to get to the 70 days." He said basically it would come down to being questioned, under oath, on the stand. What you tell the Trustee/Judge was your thought process whether they would hold you accountable to the 70 day rule or not.

Hummmmm.... Of the 2 of us, he knows the Court officials better than I do. But I wonder if he's thinking old rules there instead of new law requirements??!!

He said just from what he knew, we're borderline 7/13. He'd have to look at actual numbers and crunch the data before he advised one way or the other. He said 13 has some advantages to it that could work for us in our particular situation even if we could go 7. He'd just have to see which way the numbers went to best know how to advise us.

At some point, he said it pretty well sounded to him like we had decided to file BK. I told him Nope. Just researching options. I know we could just let it all go and eventually it will get written off. Then it becomes R9 and is taxable income to us. He said Yep. Then he said something very interesting. "I don't advise people to file BK. I have enough business without soliciting customers. I look at each individual person's or couple's situation and see if they need to file. Some people come to me and they don't need to file BK. If they don't, I will advise them of other options they have available. I don't like to see anyone file unless they absolutely have to."

The attny also said BK is not a magic, cure all pill. There's some underlying cause why our finances have put us in this position. He said we will also need to look long and hard at our budget. Learn how to live within our income. If not, we'll be back in this position rather quickly, without the safety net CC's have provided in the past. That part is so true.

We were on the phone for an hour. He did say that since we have to go by the old state's rules, he may have to get some help from an attny there. Statutes are one thing. How the statutes are applied can be all together different. I asked if he wanted to schedule an appt so he could look at our bills and papers and such. He said Nope. Just call him if we decided we want to file and wanted him to represent us. He finished the conversation saying, "If you have any more questions, feel free to call anytime. I'm here to help." No mention of a bill or anything.

I'll be interested to see what other attnys have to say about whether we should wait out the magic 70 days or proceed.

[bkfiler]

good input. thanks for sharing.

you asked about old law or new law. he was talking about new law. its the same idea except new law has some 70 day restrictions. much of that wont matter if the charges are small anyway.

worst case you will owe what is not dischargable. im assuming out of all your debt that most was long before the 70 days. remember that the objections come to specific charges usually.

[SinkingFast]

Well, we had a face to face consult with another attny. He's a geeky, nerdy type character. You can tell he knows his stuff, but he can't communicate it in terms that regular folk can understand. Also, we felt he lives in fear of the Court. He said several times he knows what the Court expects/likes to see. At one point, he said, "I know him. He is really mean that way. A real stickler.", I think in reference to the Trustee?? Not really sure there.

He was adamant about the 70/90 day rules. No cash advances for 70 days, no charges for 90 days. Since I had written some convenience checks to pay bills in December and charged up until last week, he won't even consider starting to file for a couple of months. He said with the new rules, if we file before that time period, the burden of proof is on us, AND we would jeopardize having the entire balance on the CC's we had used not being discharged. That was a direct contrast to the other attny who felt our charging habits established a pattern of behavior, were basically smaller amounts, and wouldn't even be a problem.

The attny tonite said it takes 30-45 days to get thru everything that needs to be filled out. He said he needs/has to list a complete inventory of our household goods and we have to put a value on each and every item.

The attny also crunched some numbers with us. He never once used the Means Test. He took Hubby's net pay amount, deducted our rent, electric average, propane amount, etc. Each item, he'd say, "The Court will allow that. The Court will allow that. We can enter $X here because that's what the Court is used to seeing." On our propane, he raised the $ amount per month. On our auto insurance, he said we had the highest amount he'd ever seen and the court simply would not accept it. We said 4 vehicles with 2 teenagers. He said the law does not require you to provide your kids with cars, so we deducted for the premiums on the kids' cars, gave him a revised $ amount, and he said, "The Court will allow that."

He recommended giving up the house in the BK. He explained why but he wasn't real clear when he did. Basically all I got was giving up the house was a good thing for us in several ways. That would release/protect us from the lender coming back on us the lender can't sell it for enough to cover the mortgage. And without the Vested interest in protecting the equity for a property exemption, it allowed us, or threw us over into, not sure which, the Hardship category of Ch 13.

The other attny told me on the phone there's an additional benefit to giving up the house in the BK. We aren't responsible for Capital Gains on the proceeds. He said if our Basis (purchase price plus improvements) was $100K and we sold the house for $200K, we'd have $100K of CG. If we let the house go in the BK, we are not responsible for any CG. I mentioned that to the attny this evening and he said, "Oh Yeah! I hadn't even thought of that!"

He said we qualified for a Ch 13 Hardship, and that he would recommend a payment of $450 a month for 5 years. The Court would take over sending in our car payment for us. Our car payment is $250/month so our Ch 13 would basically cost us $200/month. And he was very confident that the Court would be satisfied with that arrangement. He never even addressed our old state's exemptions. Hubby even asked him about it and he blew it aside as if it didn't matter. He said exemptions really only come into play when property is involved, or if you came from a Debtor Friendly state, like Florida or Texas. Since we didn't/weren't either, the Court would proceed as if we were long time residents of the new state.

We asked about CC payments and he told us how to handle that. He said we really need to pay them something until we file. Pay minimums on any that we used recently for this month, and possibly next month. For the others, send them a letter explaining the job change, problems with selling the house, etc., basically the truth, and send them a few $$, maybe $50 to one, $25 to another kind of thing. If we want, we can just go ahead and do a Deed In Lieu of Foreclosure with the mortgage lender. He can draft an agreement that will protect us against any sales deficit so we wouldn't even have to make another house payment.

The second guy is so totally different than the first one. We've only heard 2 different viewpoints and I'm already confused.