Have some questions.. Would LOVE some answers :-)

[tommy1984]

Hey every one, Just created an account. Like a lot of people who sign up here, I am having extreme difficulty paying my bills and am considering bankruptcy for a fresh start. A little about me then my questions...

I am a married father of 2 with the 3rd child on the way and have been employed/unemployed several times over the fire of my marriage. During the employed times maybe we used credit more that we should have because (I make ok money and can pay this back) and during the unemployed times we were forced to rely on credit for living expenses, (food, clothing, house hold items such as cleaning supply and so on.)

in 2012 we were pretty much homeless and my wife grandmother gifted us $100k to purchase a home while we did and put it in my wife name only. We own 1 vehicle which we need to trade in for a large one since the new baby is on the way, both our credits are very good, mine is over 800.

Between the both of us we owe around 15,000 to credit cards, 23,000 on our truck, and I owe 12,000 on a ATV (i know that was a stupid purchase.)
The atv loan is in my name only so I'm thinking "why ruin both our credits?) and I'm wondering if it is lawful for me to get a couple more credit cards and do balance transfers on my wife debt on her credit cards to my self, then file bankruptcy on all the credit card debt and my ATV debt?

That would free up over $500 a month and make it so much easier to make the car payment and buy things for the house hold.

my income situation right now is low, I am making an attempt at self employment doing internet marketing and profited MAYBE $8,000 last year, my tax return showed a $15,000 profit tho (I got more back if I showed more profit) so thats probably the number they will use correct? In addition to that my oldest son receives SSI of a little over $700 a month which is in my wife name. Also we qualify for medicare and a small amount of food stamps (not enough to do us through the month tho)

So does it count like I can take on my wife CC debt and file on it and my ATV? would they try to take our home (100% paid for) or our car?

I understand that I would need to make the trade for a larger car before I file as I will not have the credit for it afterwords.

Thank you for your wise input.

Signed: A struggling father and husband

Thomas

[tommy1984]

Also if possible for me to take her debt before filing, we will try to be approved for the new car in just her name to avoid any hassle over it.

[keepmine]

I don't think very many people are going to be interested in helping you commit bk fraud.

Your best bet is to get yourself a job. Even if you file bk, you are not going to be able to support a large family on $8K a year.

[tommy1984]

How would it be fraud? our debt is our debt weather its in just my name or both of our names, Right? I had a decent Job, Unfortunately when you live in a area where coal mining is the only source of decent income and 80% of miners have been laid off, jobs are few and far between and when an opening does come up there are 6,000 applicants fighting for it... Not that easy, so Im doing what I can do for now and that is continuing to try and build my self a online business until the time comes that I am chosen for one of the super rare job opportunities in my area.

If you notice in my original post, I ASK if it is legal for me to take on all the debt that we created on her cards before filing, I didn't ask "can you help me get away with this" so again, how would it be fraud? either way we would be filing on the same amount, only this way one of us would get to keep their credit score.

And if we both do have to file, would that but our home at risk being that it is paid for? Thats what we are really worried about.

Thomas

[justbroke]

How would it be fraud?

Everything that you wrote below appears, on the edges, to be a fraudulent or prohibited activity. Since people like lists, let me make one so that everyone is clear what I have observed. (Please understand that this may sting a little.)

• You want to move debt from your wife to you so you can file bankruptcy on it while keeping her credit pristine. That's an attempt to hinder, delay or defraud creditors (which an emphasis on defraud).
• You claimed to earn more in profit on a business so that you would obtain a higher tax refund. That's tax fraud. You are not allowed to overstate or understand income in order to obtain a higher tax refund. If you had a net operating loss you could consult a tax expert who may advise you to carry the NOL forward or backwards. These are tax related issues, I'm neither a tax attorney nor a tax expert, so seek true legal advice on the topic. This is my observation. (I think this is no different than people who observe that having 2 children and having earnings in the "sweet spot" for EIC is about $12-$15K so they make sure that is what they earned -- even if they didn't earn that amount.)

I'll give you my observation on each of the things that you asked.

The atv loan is in my name only so I'm thinking "why ruin both our credits?) and I'm wondering if it is lawful for me to get a couple more credit cards and do balance transfers on my wife debt on her credit cards to my self, then file bankruptcy on all the credit card debt and my ATV debt?

This would be considered fraudulent. In fact, a wise creditor should recognize this and file a complaint (adversary proceeding/AP) within the bankruptcy have this declared non-dischargeable. You may even end up paying their attorney fees if they prove that, on the eve of bankruptcy, you had foresight to move balances from your wife to new credit cards, just to discharge them in you personal bankruptcy. I wouldn't even think about doing what you have contemplated. While this type of fraudulent conveyance (actual fraud or "constructive" fraud) may be difficult to prove, you only need the good "scent" of impropriety to be successful with an AP against the debtor.

my income situation right now is low, I am making an attempt at self employment doing internet marketing and profited MAYBE $8,000 last year, my tax return showed a $15,000 profit tho (I got more back if I showed more profit) so thats probably the number they will use correct?

I can only recommend that you seek professional tax advice.

Also if possible for me to take her debt before filing, we will try to be approved for the new car in just her name to avoid any hassle over it.

See above. This may actually be constructive fraud under bankruptcy's fraudulent conveyance statute (11 USC 548)

And if we both do have to file, would that but our home at risk being that it is paid for? Thats what we are really worried about.

Kentucky has lousy bankruptcy exemptions, and the Federal Bankruptcy exemption scheme isn't entirely that much better for your homestead. You should really reach out to some bankruptcy attorneys and determine the best asset planning strategy. Your spouse owns the house and you're not in a community property state. However, you are correct to have concern with protecting the home from creditors (in general).

Only an attorney looking at all your data can provide you with the best strategy. You have some specific issues that are not easy to answer. If you lived in Florida, Arizona, or Texas (to name a few), the homestead would not be an issue at all. Since you don't live in such a State and Kentucky seems more archaic than Florida -- when it comes to certain exemptions -- I too would be concerned.

[tommy1984]

Thank you for explaining it to me better just broke :-). I should probabally clarify a few things. 1 I didn't actually report a higher gross earnings on my taxes but under the advise of h&r block, I just did not claim all of my expenses which they said was a normal practice. 2. My wife and I do our best to pay no interest on cards, this means doing frequent balance transfers from one card to another when the introductory APR is nearly up. So we have transferred our balances around from one of our names to the others for a number of hears now. As it happens her Apr is due to raise in a few months and with me getting a constant barrage of 0% offers we were planing to go ahead and transfer the balance to me long before the recent thought of looking into Bk ever entered my mind. So gevin the fact that the transfer would be done for that reason and IF I did in fact file for BK it would likely still be 3-5 months down the road, would they still try to claim fraud? You are right tho I do need to talk to an attorney because protecting our children's home is priority. Before I would risk it I'd just stop making payments non the ATV and tell them to come get it. That way they couldn't touch a house not in my name.

[justbroke]

What I wrote is my observation. An attorney that is familiar with your District and you very specific circumstances may take an aggressive approach or a conservative approach. I write that it could a an issue with the transfers, because you are, in fact, on a bankruptcy board asking about whether it's okay to move balances around. I am not an attorney and I can only suggest that to be properly advised, you could ask an asset protection attorney and/or a bankruptcy attorney.

[AngelinaCat]

A trustee expects to have a 6 month look-back from the date you file. That means you will have to provide six months worth of pay stubs (advices if you are paid electronically) and usually two years worth of income tax returns.

However, if within that 6 month look-back period, there appears to be changes of titles, accounts., etc., then the trustee has the power to look-back as far as necessary to see if there is any kind of fraudulent activity that may be involved. Such action may be totally innocent on your part, but the BK Courts do not see it that way.

Should you actually go and transfer the titles, etc., allow at least six months to a year to pass before trying to file. This is NOT a green light to go ahead and do it, but if if you have done so anyway w/o waiting on advice from here or by reading the NOLO books, then let as much time pass as is possible before you file.

'Hub and I have 'been there and done that'!

[despritfreya]

I fully support JB's comments. You really need to be discussing this with a local bk attny. I realize you are simply inquiring "what if" but the fact that you are asking leads to the belief that you may attempt to manipulate the system. This is a very dangerous path to take, both as it relates to the creditors involved and the questions that can be asked by your Trustee. Tomorrow start calling and setting up appointments. Shouldn't cost much, if anything, to at least meet with two or three attorneys.

Des.

[Drazil65]

Also, just some additional comments on your job choices, if you cannot get employment in the field you are in (apparently coal industry) then you get 2 or 3 jobs (yes many of us have done it) to make it through until you can. Especially if you are continuing to expand you family, just a thought. That is something you can do before you even make a decision about bankruptcy.

[LadyInTheRed]

1 I didn't actually report a higher gross earnings on my taxes but under the advise of h&r block, I just did not claim all of my expenses which they said was a normal practice.

So, you inflated your income by not claiming business expenses so that you could get an earned income credit. It may be a normal practice by at least one H&R Block employee, but that doesn't make it legal. If you were audited and the auditor looked closely enough to find you didn't report all of your business expenses, I guarantee you they would not think it was okay. Just because you think something is okay to do when you do it, does not mean it is not fraud under the law. The same goes for actions you may take before filing BK, like intentionally taking on somebody else's debt so you can have it discharged in BK.

Before I would risk it I'd just stop making payments non the ATV and tell them to come get it.

If you can't pay your expenses without using credit cards, stopping payments on the ATV is something you should consider, even if they lender may sue you for a deficiency. Discuss this option when you go for consultations with bankruptcy attorneys.

[LadyInTheRed]

By the way, welcome to BKforum! I am glad you found us before making mistakes that could prevent you from getting a BK discharge if that is your best course of action.

Please consult with some BK attorneys.

[tommy1984]

I have talked it over with my wife and let her in on some of the valuable info you guys have given me, we are going to speak to a lawyer and see about filing jointly providing we can protect our home.. I just hope the tax thing don't come back to haunt me. When the h&r block lady showed me how to do this I took it for granted that it was perfectly premissable.... Trust me, if I could find 2 jobs I would. I grew accustom to working 16-18 hour days in the mines so that's not the issue.. The issue is there are 2 gas stations a rite aid and a grocery store with in an hour of my house and thousands of people asking them for a job.. Relocating isn't an option now either.

[bcohen]

All this talk about bankruptcy fraud goes right out the window as long as you don't actually file for bankruptcy. It sounds like bankruptcy would not be useful to you, anyways. Bankruptcy is designed to protect assets which you need in order to survive from creditors. However, you don't own anything which creditors could take (other than the ATV, which the lender has a lien on).

If you are not filing for bankruptcy protection, then there is no such thing as "preferential payments" and there is no trustee to worry about probing your past transactions. Since you don't appear to own anything of value, and your income is too low to allow for wage garnishment, I would suggest stopping payments on the ATV as well as on any credit cards which are in your name alone. I would recommend that you continue paying all debts which are in your wife's name, or in both names jointly.

If and when you become gainfully employed again, then you can consider filing for bankruptcy at that point.

[tommy1984]

wouldnt the credit card companies bring a hailstorm down on me if I simply stopped making payments? It seems like I would be constantly harassed by creditors and suid as well.