BK Newbie QS

[BK newbie]

I am meeting w/ atty tomorrow to discuss filing for BK.
I read somewhere on here that you should have a zero banl balance before you file.
I recently did a cash advance from a credit card compnay, long before I thought I was going to file, but now that BK seem inevitable, I should either pay the card back or pay off a school loan seeing as how the credit card debt may get discharged and the student loan will not.
If I used a cash advance to pay off my credit card before filing is that illegal? If not, will it cause my case to NOT get discharged?

Orignally I was thinking about doing this because it'd be cheaper to pay off a 3.9% credit card bill than it would be to pay off a 7% student loan.

Also, I got into some debt with friends and family and obviously I am at the end of my rope financially... If I pay them back with funds from the cash advance will that look suspicious also?
I am worried that by doing the right thing and repaying my debts to friends and famly that my filings will not be accepted and my debts challenged and not discharged...
I feel real paranoid asking questions like this but I am prettyy nervous about making a misstep here.
Your responses are appreciated, thank you

[anonymuse]

You have to watch out for cash advances and credit card charges 90 days prior to filing. Sometimes, people have to hold off filing until they're out of that 90 day period so that it does not look like you are intentionally charging stuff that you know will be put into BK. I **think** your best bet would be to pay that credit card back (though remember, this is not legal advice).

Paying off friends is shown as preferential payments and will not be tolerated either.

Make a list of questions for the attorney tomorrow and make sure you get all of them answered.

Good luck and look at the stickies at the top of each of these forums--they will really help you out!

[SinkingFast]

Cash Advances within 70 days of filing, in excess of $700 for luxury items, the burden of proof that you did not take the money under false pretenses falls on you. Beyond the 70 days, the burden of proof shifts to the Creditor.

If you pay back the CA to the original creditor within 90 days of filing BK that's considered a Preferential Payment to an unsecured Creditor. It's now money the Trustee can and will go after to wrangle back from the Creditor. The Trustee does this to distribute the proceeds amongst all Creditors. But, the Trustee also get's a cut of the $$ the Trustee gets from the Creditor.

If this were a routine monthly payment you've been making on an on going basis to that Creditor, it would be no big deal. But a one time, repayment of a cash advance just prior to filing BK, you will probably be called in for a special hearing with the Judge and the Trustee to investigate the payment and your motives.

If you're planning on filing BK, stop using your CC's, stop taking cash advances, stop writing convenience checks (which are considered cash advances), and wait.

Wait out the time period for Presumption, 70 days, and the time period for Preferential Payments, 90 days, as well.

Wait that long, at the very least, prior to filing.

[djk]

depending on what "recently" means in terms of how long ago, the cash advance may cause problems if you file for bankruptcy. it would be up to the card company and the trustee to decide if the advance would be problematic.
let us know how the lawyer consult goes and good luck

[BK newbie]

Thanks for all the replies.
The CA was this month, so I guess I should just pay back the CC company, that's the easiest route.
What should I ask my attorney tomorrow?
What should he be telling me?
How do I know if he is a good BK attorney?

[FoolAndHisMoney]

If you still have the cash advance money in the bank you maybe better off just giving it back and waiting over 90 days to file. If you pay off the school loan with the ca money they may demand it back no matter how long ago it was done. They usually don't like transferring taxes and school loans to unsecured debt and bankrupting the unsecured debt.

If you pay back any insiders such as your friends and family you will have to wait a year to file if each payment exceeds $600. None of this is illegal, the trustee will just ask you under oath and you have to tell him you paid these insiders so he can get the money back. If you don't tell him and don't list this on the petition then that's illegal.

90 days is just the presumption period. Depending upon the amount they could go back 6 months to 1 year. Very rare, but they could.

[keepmine]

Just ask your lawyer the questions you asked here.
Do not repay friends and family until. the bk discharged. Nothing in the bk code precludes you from paying anyone post bk.

[BK newbie]

OK will do, some terms I learned here that I think will be of concern/interest are Period of Presumption and Preferential Payment.
What I think I will do is wait another 30 day period before filing just so that
I am more educated about the process.

[aa06a47]

How much was the cash advance for? If it was less than $500.00 and there are no other cash advances in the past 90 days, there is no presumption of abuse. Technically speaking, we could all take out 499.00 from each of our creditors within 70 days of filing and there would be no "abuse". Though, I don't think I would be wanting to go in front of a judge after doing so!!!

[BK newbie]

Cash advance was for $15,000.00 for a real estate deal that went sour.
I intended to pay down that balance after the deal was completed

[aa06a47]

Cash advance was for $15,000.00 for a real estate deal that went sour.
I intended to pay down that balance after the deal was completed

Oh yea...you best see a lawyer. If you still have the money, it would be best to pay them back.

[SinkingFast]

Oh yea...you best see a lawyer. If you still have the money, it would be best to pay them back.

I would still bet that could constitute a preferential payment to an unsecured creditor.

And I can just see the Trustee now, salivating over going after the CC for a $15K payment.

If you pay it back, be sure an wait out the 90 days.

You need to put time between you and your last charges anyway.

[Roadrunner]

I'd agree with the others that discussing this with an attorney before doing ANYTHING is a good idea.

Creditors can look back beyond the 70 days and try to prove abuse. If you file in the next 3-6 months, I'm guessing they would pursue it and could possibly win. If you pay it back now, you still have an issue because the trustee can take the money to distribute to all unsecured creditors, and the origianl cash advance creditor can still file an objection. If you file anytime soon, there is a good chance you'll end up repaying that $15,000 as an after bankruptcy judgement.

What other kinds of debts do you have, and what is teh reason that you're looking to bankruptcy when earlier this month (by your own post) you took out a $15000 advance for an investment?

[anonymuse]

Outside of BK, it would seem logical to me to payback that creditor since the business deal didn't go through and if that was the only reason you took it out, you'd want to minimize the fallout from the failed deal and pay off that debt immediately since there would be much interest and fees on a cash advance.

Unfortunately, the BK laws aren't necessarily logical--consult an attorney.