Using CC's and Chapter 13

[treehugger1]

CAB, Here is my situation. I used three cards last month and put about $25.00 on each card. All of my cc payments had been made and paid-as-agreed until the 1st of this month. I will make a small payment on each of the three cards the first of November. The other cards, I have 11 total (How's that for embarrassing?), I will not pay on. Every card I have is at least a year old, with many of them 10 - 15 years old. They are all maxed-out or close to it, but they have been FOR YEARS! This is the first month that I have not made any payments to unsecured creditors. I will not use my credit cards any longer. I am a bit concerned that I used the three cards this month, but my credit record shows that I have NEVER missed a payment on ANYTHING until the first of October. My attorney says that the CC companies would lose any argument about fraud. I did not pay the agreed amounts on some payday loans (don't ask), but gave them all a bit. I have been trying to keep everyone satisfied while I prepare to make my decision about BK. I have done everything I can to avoid BK. I even applied for more unsecured loans to try and sort things out, but even with a credit score of 650+, my high load of unsecured debt keeps anyone from lending me more money. I cannot borrow my way out of debt. I now have more debt payments per month than I have disposable income.

I think your situation is quite similar to my own. Until this week, I never even had an account go to collections. That changed. I know how to gain another 50 - 60 days before the collector can get a judgement in court, but this entire side of personal finance is new to me. I read on these posts where some folks go 12 - 36 months without paying anyone anything, and this is beyond my comprehension. I do feel that you should make some attempt at good faith. But, that's me.

Finally, I'm not sure how "fraud" is interpreted in a BK 13 petition. In a chapter 7, debt is discharged. In a 13, a percentage of debt "might" be discharged. I'm close to 100% payback, so discharge/non-discharge should not be an issue. Maybe others can weigh in here with respect to how the trustees/courts view recent credit card debt in a 13 versus a 7.

[CAB_44]

CAB, Here is my situation. I used three cards last month and put about $25.00 on each card. All of my cc payments had been made and paid-as-agreed until the 1st of this month. I will make a small payment on each of the three cards the first of November.

I think your situation is quite similar to my own. Until this week, I never even had an account go to collections. That changed. I know how to gain another 50 - 60 days before the collector can get a judgement in court, but this entire side of personal finance is new to me. I read on these posts where some folks go 12 - 36 months without paying anyone anything, and this is beyond my comprehension. I do feel that you should make some attempt at good faith. But, that's me.

Finally, I'm not sure how "fraud" is interpreted in a BK 13 petition. In a chapter 7, debt is discharged. In a 13, a percentage of debt "might" be discharged. I'm close to 100% payback, so discharge/non-discharge should not be an issue. Maybe others can weigh in here with respect to how the trustees/courts view recent credit card debt in a 13 versus a 7.

Yes Treehugger1~
I would never be lucky enough to get away with not paying the CC for 12-36 months.....they'd come and get me for sure.....LOL~ but evidentally some do get away with it, but like you said about the "good faith" thing....true, true....
I have paid some ( a small amount, as that is what attorney advised...just something is better than nothing) to certain ones, because I had transfered balances from one to another. Anything is better than nothing~ but it's also because I am likely to be in a 100% payback~ so, i'll have to pay it anyway, it's not really throwing money away~it'll be included in my payback.
I have an account from a tire dealer and I have paid for a lifetime free tire balance and rotate service, so I would benefit from paying that one off up front, which I almost have, because they won't likely cancel that even though I have done the BK~ we also used our gas cards some in July...just before we paid our attorney...she said we need to pay "some" on those, and I have.
I'm not so BK literate either, but sometimes certain things or ideas I should say, just make sense.
I have always paid everything up until July...that's when a few things started to show up as Late on my CR~ so now I am trying to catch up on things that I have neglected here at the house.....sheets,towels, etc etc.....I'm using the money to buy those things to prepare the way for 5 yrs.
Yet, I don't want it to be construed as fraud, that I now have some money, but it is being spent on household things....just thinking that the trustee might be suspicious of "well, you had all of that money for a few months...what did you do with it"....kind of thing.....don't know what will be said if anything~ may just be borrowing trouble with thought here.....maybe HHM cn calm me down...or SF~ they're both great!!!!!!!!!!

[treehugger1]

CAB, LOL
I didn't realize how much money I "made" per month until I stopped paying folks this month. So this is what folks are supposed to live on prior to disposable income? No wonder I'm so confused! I'm also taking care of immediate needs prior to filing in early December; repair 2000 Subaru, have brake work done on older car, etc. I'll probably file with $2K cash on hand, but I'll let the trustee decide if its his or mine. I keep asking, :what is the worst case scenario?" The trustee could dismiss my case and I'd be back to square one, except I'm smarter about creditors of unsecured debt. I live in a state tha only allows a maximum garnishment of 25% net income per month. If I allowed all my debt to go to collection and they all got in line for garnishment, I could live very happily on 75% of my take-home salary unitl I retire. In fact, I could defer 25% of income into optional retirement accounts, 25% to the creditors who garnish, and live like a king on th eother 50%. I could then "retire" and I could file for chapter 7 and still be okay. I truly believe the trustee will also recognize this, and find a 13 with workable payment plan is in the best interest of creditors. My attorney seems to think so, also. If my case were dismissed, creditors would come out worse. This is clearly not the intent of the "new law." (I keep telling myself this.) The hardest thing ot lose in all of this is my self-pride. But reading hundreds of posts on this site have led me to the conclusion that my pride is not at risk here. I've already accepted the fact that I clearly "chose poorly" and drank form the wrong cup (Indiana Jones), but that doesn't imply I ned to rollover and expose myself. Thanks to all on this board!! Feel free to PM me at any time. Cheers!

[CAB_44]

You are exactly right about the income we would have without the CC's~ I know what you mean~
Our attorney said that there would be some of the CC co.'s that won't file, and I can't imagine them not doing so, but~ that'll just be a plus for us, I guess...... I think she just wanted to give us a "worse case scenario", to be prepared for the worst, but expect that there won't be some who fil against us~
I will make sure that I don't have 500. more in the bank when we file, as that is what all have advised here.....not gonna take that chance~ !!

As far as pride, well...I look at it this way~ "you know, I'm going to be in a 100% or almost 100% payback~ if anyone wants to judge me on the fact that I am paying back most if not all of it, well then it's their problem NOT mine"~ I am willing to admit that I made some really dumb financial decisions, but they were not with the intent on filing BK~ I always counted on the fact that I would pay back all of it, even with interest...if I had intended on filing for BK prior to this I would have done it BEFORE the laws changed...lord knows I had the chance, it probably would've been easier...I would still be in a chap 13 plan, because we have jobs, but it would've been more lienient....but it wasn't even a considered option for me until this July~ that's when I realized there was NEVER gonna be a way....with the creditors sitting on my payment for 2 weeks, then charging me to be LATE raising the interest to 29.99 from a 3.9 - 4.9% ....several of my CC co.'s did that....I could see then what their tactics were....I decided there was NO way I was gonna be able to fight them, they held all of the strings~ so I swallowed my pride and decided that it was time......PAST time to get this over with~ I'll take my lumps on the head, and pay whatever the law says I have to~ don't like it, but hey...that's the reality of it!!!!!!!!!!!!
Glad that you're here to talk to~ it helps to know someone feels the same as you do, and is going through much of the same things as you are!
There are MANY like us in here~ and I am grateful for the support and advice!!!! This forum is a blessing!!!!!
You can PM me too~ anytime!!!!!!
Christina~ CAB