Do I list unused airline tickets and pre-paid rent as assets?

[bcohen]

If you file for bankruptcy, you are expected to list any and all assets--including personal property, investments, bank accounts, security deposits, and vacation reservations. Of course, if you don't file for bankruptcy, then you can get away with hiding assets from creditors, even if they obtain judgments. On the circuit court level, they don't have the same level of resources or inclination to track debtors concealing assets like they do in bankruptcy court.

That being said, filing for bankruptcy protection may not be in your best interest. If you do not file, you can hide your money from creditors, and as time progresses and the debts remain unpaid, the creditors will eventually give up and sell them to JDB's. When you move back here, you can deal with cleaning up your credit then, which may not be as difficult as you think. Many creditors and JDB's will choose not to sue if they cannot locate any lienable property in your name, or evidence of an employer. Thus, many of your debts will pass the SOL without any lawsuit being filed.

When you move back here, you can pull your credit reports, look for any judgments, and attempt to settle with the judgment creditor(s) or attempt to have the judgment(s) vacated on the grounds you were never served.

[sailing2013]

Thanks, Valle and Frogger, for introducing some humor to my situation. Like I imagine it is for everyone considering the leap into BK, my life is stressful right now; and I appreciate the ribbing. Its hard not to take yourself too seriously when presented with filing, and your humor serves as a reminder to remain in good spirits even though I'm encountering a rough patch.

If my understanding is correct, I should be able to exempt the airline tickets and pre-paid rent since I will fall below the CA exemption. $8K Cash + $2K airline ticket + $1.2K pre-paid rent + $1K electronics + $.5K personal items, clothes, etc. = $14.7K. I really don't own very much. The majority of my debt was incurred just through living expenses.

That said, I was worried less about the trustee commandeering my flight than raising a red flag by declaring it. HHM made the point: it may look suspicious; especially since one of the tickets is worth $1K (SF - Sydney). Though you'd think if I was gaming the system, I would have booked on a world class airline like Singapore Air, or at least Business Class, rather than an economy ticket on a discount airline, Air Pacific, that doesn't even serve alcohol!

Again, thanks for the humor, and I appreciate everyone's help as I sort through my options.

Cheers,
Steve

[keepsmiling]

Steve,
Welcome to the boards!
One thing to consider... where do you stand with health insurance? Maybe you are covered by a national plan there?
If not... what will you do if you incur medical bills?
It seems reckless to me to declare bk when you don't stand to be in a better position afterwards. I'm not sure I'd jump just yet if I were you.

[sailing2013]

Thanks, BCohen, for your opinion. As I had mentioned, I am examining all possible routes; and one of those paths is not filing.

As it stands today, I'm hoping to avoid defaulting on my debts altogether. Even though I have $50K in unsecured debt, I have $20K in cash; and have about six months to turn around my situation; namely, by finding work.

As I had stated above the primary reasons I see filing over not filing, if it comes to that, are:

1) it seems more honorable to file bankruptcy than to just be negligent; in a left-handed way, filing seems more responsible.

2) By filing, the "ten year clock" will start ticking, and I can start re-establishing my credit. If I move back stateside in, say, four years, the bad debts will remain that much longer on my credit report.

3) Part of me would just want closure. I don't want to have debts hanging over me on my return, or fear that relatives will receive collection letters, etc.

I'm not worried about getting sued by creditors--I can't imagine getting served in person while in Australia (from my understanding, you must be served in person via a process server).

Regarding SOL, I haven't read many posts in here or otherwise regarding SOL. What is the SOL on debts?

[sailing2013]

Thanks, Smiling. I am trying to Keep on Smilin'...I appreciate your upbeat moniker.

Regarding not being in a better position after, I'm not sure I understand that comment. I'm over my head in debt--$50K--and, if I can remove this burden, I reckon my life would be much better. Moreover, my financial position after filing would be positive--no more debt.

As I said, I'm trying to rescue myself--and have six months to make something happen. So right now I'm expecting not to file; just exploring my options, in case I need to.

Regarding medical insurance, etc., my plan is not get sick =)

[keepmine]

I'd suggest you stop paying all unsecured debt and use the cashy and gift cards to support yourself until you find a job. If the minimum payment is just 2% of the balance, you're paying $1K/month. That's just money down the proverbial rathole.

[sailing2013]

Thanks, Keeps. Since I started considering filing BK two weeks ago, I have stopped using my credit cards. It would be acting in bad faith if I continued to make purchases once I entertained the decision.

Moreover, I will continue to make payments, at least for the next few months, since:

1) I'm not sure I will file; and I don't want to damage my good credit with late or missed payments.

2) Since I had used my cards in December, if I do file when I am back in June, it would look better to the trustee and creditors, I think, if I had made a few payments on the cards; as opposed to charging items like $2K airline tickets, then making no payments on the account.

Cheers!
Steve

[SMinGA2]

One thought - sorry for being late to the party - the prepaid rent won't necessarily be prepaid rent by the time you file. You indicate you'll be in the US for the summer. I don't know your precise details so I'm going to estimate for example purposes.

Say you'll be here in July-August, and you've 'prepaid rent' for those months. It will take time to find an attorney and prepare to file, a few weeks at least. So at the time you file - perhaps the end of July - July rent is no longer prepaid. Similar for the airline tickets. Right now you have $X value in tickets for later dates, but will have completed some travel prior to filing. And I believe CA has decent wild card exemptions?

If you have not already, its probably best to STOP using the cards now. Maintain payments on the credit cards that you used for 'prepaid rent' and travel arrangements. Review all your options, seek legal counsel, etc.

[sailing2013]

Thanks, Staci. No worries about being late to the party...all opinions I am thankful for.

1) Way ahead of you on halting any new credit card purchases. As soon as I started considering filing BK, I stopped cold.

2) The pre-paid rent and airline tickets will still have value when I file. I will be in SF for two weeks in July, and will file at that time; and the pre-paid rent ($1.2K) is for August. Likewise for the airline tickets ($2K), the expensive ticket is my return to Australia ($1K) in September, and the others ($1K) are to ferry me from SF to Cincy then Dallas, to visit family, before returning to SF for my 341 meeting.

I understand this thread is getting long, and perhaps it would be better if I had broken down some of the aforementioned issues, to make it easier to engage in a dialogue.

Thanks again for your input, Staci!

--Steve

[HHM]

Still no explanation on the gift cards...

[sailing2013]

Ha!

There were purchased as Christmas gifts for my family. Since I live abroad, they make convenient gifts.

I was anticipating returning stateside for Christmas in 2012, and purchased them accordingly; but my circumstances changed, and I will be visiting this coming summer.

As I'll be in SF for a couple weeks, if I file then, at that time I will still be in possession of the cards; since I will be visiting my family in Ohio and Texas, and distributing the gifts cards, shortly after I file.

I'm not looking for trouble, HMM! =)

[bcohen]

Still no explanation on the gift cards...

Until and unless bankruptcy is declared, there is nothing wrong with hiding assets, including by purchasing gift cards, pre-paid debit cards, etc. It is an excellent way of "judgment-proofing" oneself, along with using and stashing cash.

[LadyInTheRed]

Until and unless bankruptcy is declared, there is nothing wrong with hiding assets, including by purchasing gift cards, pre-paid debit cards, etc. It is an excellent way of "judgment-proofing" oneself, along with using and stashing cash.

That may be true. But, the OP is considering BK now and he needs to be aware of things that could come up based on what he did in the past. There may be nothing wrong with converting cash to debit or gift cards to make it difficult for a judgement creditor to collect (as long as all assets are disclosed in any debtor's examination). But the existence of the cards on the date of a BK filing must be disclosed in a BK petition and could raise questions, no matter how innocently they were purchased. If the OP gives the cards to their intended receipients before filing BK, it could also be something that must be reported on the petition.

Also, and perhaps more significantly, I don't think the OP used cash to pay for these items. He charged them to credit cards.

If the OP is able to meet the requirements to establish residency in California and use California exemptions, exemption system 2 should be sufficient to cover his assets. As already pointed out, that doesn't necessarily mean that a creditor or the trustee couldn't raise a bad faith claim and try to cease the assets and/or have the debt incurred to purchase them declared non dischargeable. This is the type of detail that is important to disclose to your attorney so he can advise you on any potential issues that may arise.

ETA: I do question the wisdom of giving $2,000 in christmas gifts when you are unemployed and considering filing BK. Steve, I suggest you re-examine your priorities before handing out those cards.

[Pjmax]

I'm just asking out of curiosity, but how can someone just fly in from out of the country and file BK in CA if residency requirement is two years?

[LadyInTheRed]

I'm just asking out of curiosity, but how can someone just fly in from out of the country and file BK in CA if residency requirement is two years?

Good question. I kind of brushed passed that issue in my above post. But, since you ask...

I think your reference to 2 years has to do with the 730 day rule to determine what state's exemptons to use. If that rule doesn't apply, you use the 180 day rule. But, before you even get there, you have to determine whether you are eligible to file BK in the U.S.

Bankruptcy Code Section 109(a) states:

(a) Notwithstanding any other provision of this section, only a person that resides or has a domicile, a place of business, or property in the United States, or a municipality, may be a debtor under this title.

http://www.law.cornell.edu/uscode/text/11/109

A domicile is different than a residence. The OP needs to consult with an attorney about whether he is eligible to file BK in the US. If he is, then his attorney will advise him on what state's exemption he can use.

The OP apparently thinks he can file in CA and use CA exemptions:

1) I have not lived in the US for six years; although I visit every-other-year for about ten weeks. While I do not have any physical assets like a car or house, I do maintain my CA driver's license, vote in CA elections, receive mail at a mate's house in California, and have his address listed on my banking and credit card accounts. Accordingly, I should be okay regarding the 91-day location requirement. Moreover, I do not have a residence visa for Australia--in the legal sense, I am still an American resident; and a Californian at that.

He'll have to consult with an attorney to find out if that is enough to allow him to file BK in the US and use CA exemptions.

ETA: I edited out an explanation of how to determine what state's exemptions to use. I'm not sure I was correct in my first explanation or whether the link I provided was entirely accurate. The more I researched the more confused I was and I have run out of time to straighten it out. So, instead of risking giving incorrect information, I deleted it.