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Husband and Wife balance transfer game

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    Husband and Wife balance transfer game

    We live in a non-community property state and between my wife and I we owe $50,000 in credit card debt. I have expertly managed to almost never pay interest, but transfer balances at a 2% fee on an annual basis to keep our debt payments manageable.

    Sometimes, in order to keep those great transfer rates, I have transferred my balances to my wife's credit cards (and visa-versa). I want to file chapter 7 and all but $11,000 of our debt is in my name. The only reason my wife has $11,000 in credit card debt is because I recently transferred some onto her credit card, NOT because she made any purchases herself.

    I have no home equity because we just purchased our home with a minimal down payment, we are upside down on our vehicles, and exemptions will cover all of our property.

    I would love for my wife to keep her credit score (close to 780) in tact. If I file bankruptcy, that would allow us to use her beautiful credit score to get an auto loan and allow the bank to repossess the two vehicles in my name. It would be a fresh start for us financially but we'd also have the benefit of using her credit if needed in the future. And don't get me wrong, I hate credit cards more than I hate anything on earth and we aren't going to abuse the fact that we still have access to credit after I file chapter 7.

    What would happen if I transfer that $11,000 on my wife's credit card BACK to my cards and then file bankruptcy in six months? I am fine with waiting more than a year to file to avoid objections to that transfer from wife's card back to mine, but if I do that when should I stop making credit card payments? Can I go say- 7 months without making any payments?

    #2
    Transferring her balance to your account with the intent ion of discharging it in BK is fraud. We can't tell you to do that. You should consult with some BK attornies about how the transfers back and forth will be treated in BK. Don't make any further transfers in either direction before doing that.

    If you find out that the transfersake it necessary for your wife to file too, she can use her stellar credit to buy a car before filing.
    LadyInTheRed is in the black!
    Filed Chap 13 April 2010. Discharged May 2015.
    $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

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      #3
      The household debt that we incurred that was just transferred to her credit card needs to be transferred back to mine to keep a zero percent interest rate until 2018. The payment wouldn't be going to her, but to her creditor. According to an attorney I spoke with today, he doesn't think an issue will arise if we don't file for 90 days or longer. I don't see any clarity anywhere about a spouse being an "insider"

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        #4
        A spouse is by definition an insider. The question becomes: Is a payment to a spouse's credit card considered an transfer to an insider? An attorney can answer that question, but I can see a strong argument for it.

        An "insider" is defined under 11 USCS § 101:
        (31)The term “insider” includes—

        (A)if the debtor is an individual—
        (i) relative of the debtor or of a general partner of the debtor;
        (ii) partnership in which the debtor is a general partner;
        (iii) general partner of the debtor; or
        (iv) corporation of which the debtor is a director, officer, or person in control;

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          #5
          I suggest you talk to more than one attorney about the issue.
          LadyInTheRed is in the black!
          Filed Chap 13 April 2010. Discharged May 2015.
          $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

          Comment

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