Chapter 13 Creditor Questions

[lostinlove]

Do creditors (credit card companies) and the trustee look at your history in a Chap 13 like they do in a Chap 7? I have a lot of cash advances and I would rather spend 5 years in a chapter 13 than have my case dismissed due to the presumption of fraud. It seems like from what I've been reading on this site (you guys are great) and other articles that you are presumed to be a fraud until you prove that you aren't and if I were looking at it from the outside, i would think I was a fraud too (How can anyone go through so much cash??). Also, I know student loans are not dischargeable, but do they continue to accrue interest if they are included in the repayment plan?

Thanks!

[keepmine]

Don't pass up a 7 without a lot of study.
When did you last take a cash advance and how much cc debt do you have.

[lrprn]

From other comments posted here in the threads, some Ch 13 trustees want to look over as many as 6 months of your bank statements to see the spending patterns and some just ask how much you have in your accounts currently during your 341 meeting. What did you spend the cash advances for?

And as far as student loans go, we were told because of the way the new laws are written to ensure educational loans can't be written off, ours ($21K of PLUS loans from govt) would accrue interest no matter whether they are included in the Ch 13 plan for payment or we pay them outside our plan.

If you decide to go the Ch 13 direction, if your monthly payment makes things very tight financially, ask your student loan lender if your student loan payments can be delayed until your Ch 13 plan is paid off. The interest will accrue through the 3-5 years, but having one less payment might be make or break getting through the plan successfully.

Best of luck, lost (was going to say 'lol' but didn't want you to think I was laughing at you! ) . Let us know what you decide to do.

[lostinlove]

Thanks for the reply

Debt:
CC: $60,000
Student Loans: 75,000
Car (keeping): 20,000

Salary: $40,000
State: TX, Single, Rent

Last cash advance was in December $15,000.

Thanks!

[keepmine]

You should be OK with a Chapter 7.
You're coming up on 7-8 months since the cash advance. The more time between cc usage the better.
Let a lawyer make this call. Get 2 or 3 consultations and see what they say.

[aa06a47]

Since your past the 70 day point for a cash advance, the credit card company will have to prove you commited fraud. That is very difficult for them to prove. I think you would be OK even in a Chapter 7.

Generally speaking, I'm told credit card companies will rarely file adversarials in a Chapter 13 unless they have a slam dunk fraud case. It does happen, but is very rare.


This may change with the new law, since the "super" discharge of a chapter 13 isn't valid anymore.

[nervousSC]

My student loans are in my payment plan (95K) but are considered unsecured and so they only get a few $s every month. So, in essence they are in forebearance (through the BK) until after the plan and unfortunately, yes, they do accrue interest.

[SinkingFast]

As long as you have reasonable explanations for what you did with the cash, they won't dig into your past.

Hubby got laid off and was paid a sizeable severance. The next year, we cashed out his retirement IRA. 2 tax years where it looks, on paper, like we had huge income.

In reality, it wasn't. We had to live off the severance for 6 months and then support 2 households for a year before the money ran out. The retirement IRA went to pay off the 2nd mortgage on the house.

We have the "Paid" statement on the house and Unemployement Statements as "proof" of our explanations. Also, I saved the severance package letter and the pay stub where the company paid that money to Hubby. That satisfied all the attnys we Consulted with. Our attny scanned all the docs into their system so they are on file for our case.

As long as it sounds reasonable and plausable, and you have some sort of "documentation" of your story, you shouldn't have any problems.