New and some questions

[bkruptfool]

I have over 100K of unsecured debt. We are a family of 4 so we are looking at chapter 7 as I only make $55K/year and my wife stays home.

We haven't used any credit cards since November, but we have been struggling to keep up and I had some credit left over at our Home Depot account so I purchased 5 gift cards at $500 each and then sold them on ebay for about $465 each. We really needed the cash but now I am fearing it was a dumb move. If we don't file until this summer will I be okay? Do you know if Home Depot usually objects?

Thanks!

[BassBoy]

If you haven't used any credit in the last few months already.....and you don't file for the next few months.......you should be fine as far as having any objections. On the other hand, we've had some members here with $100K or more of unsecured debt that had some issues. Maybe they can chime in here and talk about their situation and what you should expect.

[HHM]

I don't think you will have any issues with your BK per se. I think you should probably wait another few months before filing and go talk to some lawyers.

How long did it take you to accumulate the debt and was the incurrence of debt related to any specific event, like an illness, job loss, etc, or has it simply been accumulated over time?

However, the main issue, debt notwithstanding, is your inability to live within your means. If you can't get your spending under control, your bankruptcy will be pointless.

[bkruptfool]

HHM, answer to your questions

all debt was accumulated over 2006. We have a very high house payment and I lost my job and we also gambled some. I have documentation of all our gambling. We were just living beyond our means, like you say. Is there a certain timeline you have to accumulate your debt in?

[HHM]

There are no specific rules, but I suspect that since you accumulated $100K of debt in 1 year, your case will be looked at more closely than the average case, but it will probably go through.

As for living in your means, you may need to make some hard decisions, i.e. even possibly selling the house since the payment seems to be more than you can really afford.

[ccidiot01]

We filed in FL and according to our attorney the Trustees tend to look very closely at any case where a person accumulated a lot of debt in a short period of time or in our case exceed the maximum income (we do pass the means test).

Our attorney was right on. We have had to provide additional bank statements, sales agreements on vehilces, additional tax returns, a written timeline of how we accumulated our debt over the past three-years, etc.

It's clear the Trustees are looking for evidence of fraud.

Just be prepared to provide copious amounts of info to the trustee...

[bkruptfool]

Why do they tend to investigate?

Is it because they think you are holding assets or that you are stashing money? In our case, we had cash advances that were put directly into our bank account. It was used to pay bills and probably about $30K for gambling, but this all shows in our bank account? Could we get our bankruptcy thrown out for the gambling? Boy I wish I could get a do-over in life.

Thanks!

[HHM]

Is it because they think you are holding assets or that you are stashing money? In our case, we had cash advances that were put directly into our bank account. It was used to pay bills and probably about $30K for gambling, but this all shows in our bank account? Could we get our bankruptcy thrown out for the gambling? Boy I wish I could get a do-over in life.

Thanks!

It is really two things they look at.

The first you already mentioned, since it is a lot of debt (twice your current annual income), the trustee wants to know what you did with it and to be satisfied their are no non-exempt assets that have been stashed, or given to other people (i.e. family members).

The second issue is the general notion of "abuse of the system". When a significant amount of debt is accumulated in a short period of time, and the person turns around and file BK, there will always be a suspicion of abuse. However, since you said some of the debt was accumulated because of job loss, you should be OK. The gambling is not a great fact in your favor, but we have several admitted gamblers on this forum who have filed BK without any problem. I doubt it will be an issue.

Your plan of action is what is important now. You should probably do two things. 1, create a living budget and stick to it, 2, make appointments with three BK attorney's in your area and get their insight, BK consultations are typically free.

[tradewiz50]

I have over 100K of unsecured debt. We are a family of 4 so we are looking at chapter 7 as I only make $55K/year and my wife stays home.

We haven't used any credit cards since November, but we have been struggling to keep up and I had some credit left over at our Home Depot account so I purchased 5 gift cards at $500 each and then sold them on ebay for about $465 each. We really needed the cash but now I am fearing it was a dumb move. If we don't file until this summer will I be okay? Do you know if Home Depot usually objects?

Thanks!

Sit on your hands for 6 months since you last used any credit then file.

[SinkingFast]

I have over 100K of unsecured debt. We are a family of 4 so we are looking at chapter 7 as I only make $55K/year and my wife stays home.

We haven't used any credit cards since November, but we have been struggling to keep up and I had some credit left over at our Home Depot account so I purchased 5 gift cards at $500 each and then sold them on ebay for about $465 each. We really needed the cash but now I am fearing it was a dumb move. If we don't file until this summer will I be okay? Do you know if Home Depot usually objects?

Thanks!

If you're having trouble making ends meet living cash only on your current income, then you have far deeper problems than filing BK will address.

You need to step back, look at your budget, and see where you can make deeper cuts. Look for spending leaks. A buck here for a pack of gum. $3 there for lunch at Mickie D's. You might need to increase income somehow. Maybe pick up extra hours at a fast food place or local market to earn a few extra bucks.

As to whether or not you will be investigated,............ Maybe. CC debt in excess of $100K is almost an automatic "red flag" for the UST's Office. In your case, as HHM noted, your current debt load is about 2x your annual gross income.

The Court does consider "totality of circumstances". Unless you've had some sort of change in your life,......... Loss of job with a period of extended unemployment that resulted in a new position at a significantly lower salary, HUGE medical expenses associated with a sudden or prolonged illness,.............. Then your level of debt may not coast under the UST's radar.

[bkruptfool]

Thanks for all your responses!

and thanks for being honest. I am just worried about the gambling, and the $2500 in Home Depot gift cards we charged then sold for money.

We have a large house payment, $3200, that we have just stopped paying on. Hopefully they will see that we were just trying to keep up with payments and our lifestyle because prior year wife and I were making close to 100K/year.