questionable CC use?

[biggomez777]

I'm worried that the trustee may look into our case more than is necessary. It took me and DW a week to go from "everything is fine" to "hmm....our finances seem to be out of order" to seeing a credit counselor to "shit...we have to file BK..now." We, of course, stopped using CC's that second. But we'll have CC use up until a month before our filing. Nothing big, luxurious, mainly just too much eating out and medical bills. No trips to Vegas, 60" flat screens, etc. Is this something that's going to cause problems at the 341?

[Cali]

Why did you file so quickly?

[AngelinaCat]

You really need to give us more information before we will be able to think about what we can say to help you.

What did you and DW do in the 6-9 months before you filed that might raise flags?

[justplaintired]

Are you filed? Luxury items are an issue, normal living expenses aren't a problem.

My only question might be is how much in medical bills? Was it alot? This one is a good question for your attorney.

[ameliabedilia]

We had a similar situation. We kept it together borrowing money from one account for another, so when we decided to file we had NO late payments at all. We tried to wait the 90 days but due to us moving out of state we filed at about 70. I was worried because we did have a trip to Vegas on a card! Not really, but my husband had a conference there and used the card a few times to eat- maybe $100 but I was so freaked out because it said something like Tropicana Las Vegas, super obvious! We ended up being fine and none of the cards objected. What was nice about filing so quickly was that we had only a few late payments on our credit reports and virtually no harrassing bill collectors calling all the time.

[BKParalegal]

What is hard to imagine is that over 1.3 million, and that is with an M, bankruptcies are filed each year. When it comes to a Chapter 7, the trustee really doesn't give a crap about the credit card usage(sort of). He leaves it to the credit card companies to object( pretty rare, I have been involved with 4 or 5 adversaries and it was for HUGE gambling debts on the cards). The reality of it is when it comes to the credit cards( not department store cards) they ahve neither the time, money or manpower to chase a few grand. The attorneys( who bill at $325 an hour) eat that money up in minutes before they( the creditor) will see a dime if they even win. The bottom line is it is difficult to prove fraud in BK.

Good Luck

[epiphany]

What is hard to imagine is that over 1.3 million, and that is with an M, bankruptcies are filed each year. When it comes to a Chapter 7, the trustee really doesn't give a crap about the credit card usage(sort of). He leaves it to the credit card companies to object( pretty rare, I have been involved with 4 or 5 adversaries and it was for HUGE gambling debts on the cards). The reality of it is when it comes to the credit cards( not department store cards) they ahve neither the time, money or manpower to chase a few grand. The attorneys( who bill at $325 an hour) eat that money up in minutes before they( the creditor) will see a dime if they even win. The bottom line is it is difficult to prove fraud in BK.

Good Luck

Hi BKP. What is different about department store cards?

Thanks,
ep

[BKParalegal]

Department Store Cards can be classified as PMSI-Purchase Money Security Interest. When you have a VISA and you go buy a Plasma TV and then go buy gas and groceries, well when you are making payments what exactly is getting paid down? So, regular credit cards are just unsecured debt, but you can't take your Rooms To Go or Best Buy credit card and go out for a steak dinner. You can only use it at their store buying their stuff. So when you make a payment it is paying down on the stuff and only the stuff, hence it is classified as a PMSI. This allows the dept. store card to object to your BK, and then you have a few different paths to go down. You could file a 522f and redeem the property for fair market value, you could just give it back to them, you could reaffirm the debt, or you could tell them that you had sold the stuff and don't have it anymore.

Good Luck

[biggomez777]

This is going to make us sound stupid....but we just didn't realize how much we were using our CC's to make it through a month. I bring in ~$1200/month, my wife brings in ~$1600(gotta love these high paying social service jobs), and we were paying ~$1000/month in medical bills. We've had to provide LOTS of documentation because I'm only 24, so our atty said the trustee was going to have a lot of questions about that. When we finally looked at our budget, we were $1000 in the hole every month. Credit counseling could get us to $600 in the hole. 2nd jobs aren't an option at this point, as my wife works 60 hrs a week now at one job, and I work for a 24 hour facility, so in any given week I could work any of 3 shifts. We have $30k in student loans, $30k in CC debt. One reason we've filed so quickly is that while the medical debts are there, they almost all went to CC's. They fall off in 6 months, but they're still there in the CC bill. If we filed immediately, they're still separate expenses. W/O them, we can't pass means, but we can't afford to pay our bills.

[epiphany]

Department Store Cards can be classified as PMSI-Purchase Money Security Interest. When you have a VISA and you go buy a Plasma TV and then go buy gas and groceries, well when you are making payments what exactly is getting paid down? So, regular credit cards are just unsecured debt, but you can't take your Rooms To Go or Best Buy credit card and go out for a steak dinner. You can only use it at their store buying their stuff. So when you make a payment it is paying down on the stuff and only the stuff, hence it is classified as a PMSI. This allows the dept. store card to object to your BK, and then you have a few different paths to go down. You could file a 522f and redeem the property for fair market value, you could just give it back to them, you could reaffirm the debt, or you could tell them that you had sold the stuff and don't have it anymore.

Good Luck

Beautiful clarification..thank you.

My dept store cards can come get whatever they want, if I still have it. It's all crap by now.

ep

[slappy]

Department Store Cards can be classified as PMSI-Purchase Money Security Interest. When you have a VISA and you go buy a Plasma TV and then go buy gas and groceries, well when you are making payments what exactly is getting paid down? So, regular credit cards are just unsecured debt, but you can't take your Rooms To Go or Best Buy credit card and go out for a steak dinner. You can only use it at their store buying their stuff. So when you make a payment it is paying down on the stuff and only the stuff, hence it is classified as a PMSI. This allows the dept. store card to object to your BK, and then you have a few different paths to go down. You could file a 522f and redeem the property for fair market value, you could just give it back to them, you could reaffirm the debt, or you could tell them that you had sold the stuff and don't have it anymore.

Good Luck

BKParalegal,
Through your experience, how common is it for companies like HD and Lowes to file objections like you explain above? Thanks

[Frogge]

This is going to make us sound stupid....but we just didn't realize how much we were using our CC's to make it through a month. I bring in ~$1200/month, my wife brings in ~$1600(gotta love these high paying social service jobs), and we were paying ~$1000/month in medical bills. We've had to provide LOTS of documentation because I'm only 24, so our atty said the trustee was going to have a lot of questions about that. When we finally looked at our budget, we were $1000 in the hole every month. Credit counseling could get us to $600 in the hole. 2nd jobs aren't an option at this point, as my wife works 60 hrs a week now at one job, and I work for a 24 hour facility, so in any given week I could work any of 3 shifts. We have $30k in student loans, $30k in CC debt. One reason we've filed so quickly is that while the medical debts are there, they almost all went to CC's. They fall off in 6 months, but they're still there in the CC bill. If we filed immediately, they're still separate expenses. W/O them, we can't pass means, but we can't afford to pay our bills.

You don't sound stupid at all - I came to the same realization when I looked at past spending. I was amazed what I "thought" we should be getting by on for a family of 5, and freely used CC's to make it (live beyond means), because for some reason.... the budget didn't work.?! (not funny, but shaking my head)

[hnhlvr]

Department Store Cards can be classified as PMSI-Purchase Money Security Interest. When you have a VISA and you go buy a Plasma TV and then go buy gas and groceries, well when you are making payments what exactly is getting paid down? So, regular credit cards are just unsecured debt, but you can't take your Rooms To Go or Best Buy credit card and go out for a steak dinner. You can only use it at their store buying their stuff. So when you make a payment it is paying down on the stuff and only the stuff, hence it is classified as a PMSI. This allows the dept. store card to object to your BK, and then you have a few different paths to go down. You could file a 522f and redeem the property for fair market value, you could just give it back to them, you could reaffirm the debt, or you could tell them that you had sold the stuff and don't have it anymore.

Good Luck

What if you had a $1,600 upgrade done to your home and then two months later, your husband is unexpectedly laid off and then a few months later, you come to terms with the fact that you're not going to be able to pay for your mortgage and you decide to walk from the home?

We refloored the downstairs of our house and that was purchased 12 months' same-as-cash on a Home Depot Credit Card and payment will be due next January, long after my house has been foreclosed on, but BEFORE we file for BK. Should I just mail Home Depot a copy of my house key? (lol)

[AngelinaCatHub]

What if you had a $1,600 upgrade done to your home and then two months later, your husband is unexpectedly laid off and then a few months later, you come to terms with the fact that you're not going to be able to pay for your mortgage and you decide to walk from the home?

We refloored the downstairs of our house and that was purchased 12 months' same-as-cash on a Home Depot Credit Card and payment will be due next January, long after my house has been foreclosed on, but BEFORE we file for BK. Should I just mail Home Depot a copy of my house key? (lol)

Home Depot may put a mechanic's lien on the property that would have to be cleared in a foreclosure. The Mortgage company would probably eat that one. 'Hub