Luxury Items

[jays567]

Hi All,

My wife and I are getting ready to file chapter 7 and have started talking to an attorney here in California. I am about to pay his retainer and fees but I have a question.

We used our Best Buy credit card in December 08 to purchase a new tv (~$500) and two xbox 360s (~$600). We had every intention to pay it back at the time but now it looks like BK is our only option to get out from under a deficient car loan I voluntarily surrendered back in October. We are planning to include the Best Buy card in the proceedings but from what I've read, luxury purchases over $500 within 90 days can be seen as fraud.

If we wait the 90 days, will we be insulated from Best Buy filing an AP against us? Our total debt with them is about $2200.

[StartingOver08]

Have you made any payments toward this new debt at all? I would think that charging more than $1100 in Dec 2008 and then deciding a couple of days later that you need to talk to a BK attorney about filing would show intent to never repay, IMO.

If at all possible, I would either make some payments toward this particular creditor - or return the items. Unless you don't mind having this particular debt non-dischargable. But of course, your attorney will know the Trustees in your district and how they would view $1100 in charges for luxury items just before speaking to a BK attorney.

[AngelinaCatHub]

From what I understand, and you might search this site as I’ve seen it here, Best Buy is a toughie and will want the stuff back. They will still attempt to get the fees or deficiency. Worst card you could use. Now If it is less than 30 days, you might just take the stuff back and tell them you don’t like it, and perhaps if you are fortunate, they will credit your card back and the point will be moot.

I’m afraid all items will look like luxury. ‘Hub

I re-read your post and today, we are still in December 08. Take the stuff back as defective or didn't work out. Don't tell the store anymore than you don't want the stuff. 'Hub

[AngelinaCatHub]

If we wait the 90 days, will we be insulated from Best Buy filing an AP against us? Our total debt with them is about $2200.

Re-read my post above. If you get your $1100 back you will only owe them $1100, and by the time you bk to the 341, you could have them paid off so they won't go after what ever else you purchased. 'Hub

[HHM]

For the most part, you will be insulated if you wait the 90 days IF YOU MAKE THE MINIMUM PAYMENTS DURING THAT TIME, if you make no payments to this account, then you have a much higher risk even if you wait the 90 days.

But for the most part, given the amount involved and so long as you made at least the minimum payments in the mean time, you would have a low risk of any objection.

[TEW]

you are right HUB I have seen many posts about best buy wanting the stuff back.

[mgmadara]

I've seen quite a few posts about Best Buy wanting their stuff back but no posts about Best Buy actually coming for their stuff. In our case we were sent a letter after discharge asking for us to give back our stuff. The letter was not from Best Buy it was from Bass & Associates. We also received a few phone calls which we didn't answer. The letters were generic and didn't even list the items that they "wanted back." They are not at all interested in getting their things back. They want you to think they are coming for their stuff so you will negotiate a settlement and pay them some money. Our lawyer advised us to ignore them and after 2 letters and a few phone calls they went away. That was 2 years ago and we have not heard from them since then.

My advice is to make a few minimum payments, put some time between these purchases and filing, and when you get the letters from Bass & Associates, ignore them.

[jessegirl]

It looks really fishy that you purchased luxury items and then a few days later are going to claim BK. You just don't decide overnight that you need to file a bk and then go see any attorney within days. Its usually over months period that you realize that you cannot make the minimum payments and then you start to fall behind then you see an attorney. Its not make purchase and then days later go see an attorney. I would defiantely make some time between those purchases before you even file. Make some payments before then. Just my opinion. My attorney asked me if we charged anything within 90 days of seeing him. That was one of the first questions of of his mouth.

[Flamingo]

It looks really fishy that you purchased luxury items and then a few days later are going to claim BK. You just don't decide overnight that you need to file a bk and then go see any attorney within days. Its usually over months period that you realize that you cannot make the minimum payments and then you start to fall behind then you see an attorney. Its not make purchase and then days later go see an attorney. I would defiantely make some time between those purchases before you even file. Make some payments before then. Just my opinion. My attorney asked me if we charged anything within 90 days of seeing him. That was one of the first questions of of his mouth.

I agree as to the "fishiness" of the situation in that the OP stated in the original posting that "...BK is our only option to get out from under a deficient car loan I voluntarily surrendered back in October." The electronic and XBox purchases were made in December so it appears financial issues leading to filing could have already been in place prior to the December purchases. It appears the items could have been purchased with no intent to pay back. If more than one person sees the situation this way, you can be certain the Trustee will also and so will the creditor. It's not one had to charge perscriptions, food or necessities (XBox is not a necessity)...this was a luxury purchase. Bad move which may create some issues.

[jays567]

Thanks for all the helpful responses.

I am not saying I wont reaffirm the debt. My intention is not to defraud Best Buy or anyone for that matter. We (the wifey and I) just figure that if we're already filing BK, we might as well include all of our debt and start over.

The timing of the auto deficiency decision was bad. It was right before Christmas, right after we purchased these items at Best Buy. I was waiting on the auto company's word to move forward. We owe $17,000 on a car loan post-sale and they still demand $600 a month firm. After I heard that, BK became the only option.

I have a phone call into my attorney asking about this. I have not paid his retainer yet so if I wait and put some distance in between the purchases and starting the BK like you've all said, I may be OK. Also, I have been paying Best Buy minimum payments on time every month/never late.

[Help!]

Are you over median or below median? If below median, I fully agree with HHM that there's a low probability of an objection if you make the minimum payments. If you are above median and your case gets looked at more closely (the full 6 months prior to filing), I would be very concerned - especially since you stopped paying on a vehicle.

[jays567]

Just an update: I retained my attorney today. I will be reaffirming the Best Buy debt and liquidating everything else.

I have a new worry now though: Insider preferential payments as we have been paying my mother in-law and sister in-law $170 per month (each) for credit cards which we used. As it turns out, this could be considered insider preferential according to my attorney. I really hope that that the trustee doesn't go after it considering its such a small amount (aprrox. 2000 over 12 mos each) but who knows. This really sucks

[keepmine]

If you've not been sued, there is no real hurry to file. Just wait out the 90 days for both Best Buy and any preference issues.

[jessegirl]

Hey Jays, did you pay them back with a check or cash? If it is cash then no worries, who will know??

[jays567]

Hey Jays, did you pay them back with a check or cash? If it is cash then no worries, who will know??

Cash but sometimes we paid via a transfer from our bank acct. to theirs. I've also told the attorney so I think he's going to include it. He told me that not to worry about it because the amount (2,000 each over 12 months) may be too small for the trustee to go after. It still doesn't make me feel any better about it though.