New Here and Seriously in Trouble

[Rick]

Six months ago we had a son. I already had a load of debt -50k plus but wasn't thinking and took out a cash advance of
15k. My wife was going to go back to work 3 months after having the baby so I thought we'd be ok. Well, she changed her mind and decided she'd rather stay home with our son. Plus she figured her pay would just be paying for childcare and it just wasn't worth working. We never sat down and crunched the numbers.

Now, 6 months later, I am quaking in my boots. Rates on my other cards jumped (balance transfer low rate offers expired). After years of never missing payments, I can longer pay my cc debt. I know I qualify for a 7 (I fall under the median) and I have no assets to protect. But this last cash advance I took was just careless. I've made 6 payments towards this last cash advance but I'm wondering if a trustee would throw out my case because of this?

If I go ahead and file, what is the worst to expect?

[HHM]

Welcome to the forum Rick...

Anyway, you are "quaking in your boots" for NO reason. The cash advance is meaningless to the trustee and will not upset or otherwise cause your BK to get dismissed.

Worst case scenario is this: The creditor against whom you took the cash advance will object to discharge of THAT cash advance. If the creditor wins, that means you will have to pay back that $15K. However, you took out the cash advance about 6 months ago and made payments on time...so the creditor is facing an uphill battle on actually winning the objection. (the creditor has to prove that you took out the cash advance without a reasonable expectation to be able to pay it back....but you made payments, had a reasonable expectations to pay it back.) Because of the size of the cash advance, I would expect the creditor to come out of the woodwork and do some saber rattling, but I doubt they would move forward with an objection.

In any event, bottom line...the cash advance is not going to get your case tossed out by the trustee...the trustee could care less. All the trustee cares about is whether there are any assets he can get his hands on to pay creditors.

[lrprn]

But this last cash advance I took was just careless. I've made 6 payments towards this last cash advance but I'm wondering if a trustee would throw out my case because of this?

I'm assuming the cash advance you took was on a credit card. Since it was six months ago and you've made payments on it since that time, you're very likely ok. If you can prove where the money went (legitimate living expenses, new baby costs, etc) then that's very much in your favor.

If you haven't done so already, set up free or low-cost initial consultations with 3-4 bankruptcy lawyers in your area. You'll be able to ask about this and other questions you might have about filing. Are you and your wife going to file together? Which state do you live in?

If I go ahead and file, what is the worst to expect?

The worst is that this creditor will object and you would have to pay the $15K back. However, to make that happen, the cc company has to prove to the bk court that you took the advance knowing that you were going to file. This will be very hard to do, especially since six months has passed and you've made payments on it. Chances are very good that you will be fine.