The topic on non-luxurious vs luxurious items, fraud and the use of credit

[EandGWZ]

Thomas Curry was involved in your case? Please do share! That must have been an epic case.

I dealt with one of his associates, it never got to the point of litigation. It was the first time in my life where I realized that government works, sometimes.

[Pizza]

1) When did you first consider filing BK?

This wouldn't be a fair question anyway because a multitude of factors could cause someone to reconsider. There are probably people that had considered bankruptcy 10 years ago and ended up not having to because of a new/better job, inheritance, etc.

Considering filing and going through with it are two completely different things.

[sailing2013]

Thomas Curry was involved in your case? Please do share! That must have been an epic case.

[EandGWZ]

Wow! And "them", may be us............

Karma.

Touché! The consumer never wins against the bank. I was on the losing end of some long term loans with Chase. The specifics were pay 3% to originate and the loan would be 0% until I paid it off, basically my payment was the standard 2.5% of the loan every month. When Obama took office and past those laws they called me and said my new payment was 5% the balance and the APR would be 5.99%! When I told them that was more than I could handle they offered me another loan with 3% origination and 1.99% APR to pay off that loan...haha. That's how banks operate...in the end I had to get the comptroller of currency involved in the case. Although not as bad, I managed to keep my payments at 2.5% the balance subject to 2% APR.

The idea for this post was what I perceived as heavy reliance on the luxury vs. non luxury aspect of using credit up until the day of filing, that is, some individuals thinking that it is ok to use their card up until the time of filing as long as the purchases fall under everyday expenses. My position is to stop using the cards once you realize you won't be able to pay them back (for ethical and moral reasons) and to wait the 90 days to avoid unnecessary litigation. I do not condone nor encourage fraudulent use of credit.

[bcohen]

I think the only only question I was asked that's even close, was: 'When was the last time you used your credit cards?' I remember the TT looked very surprised when I answered 'about 3 years ago.' Don't know exactly what to make of that, I didn't ask, and was trying to keep my answers to 'yes, sir' and 'no, sir.'

By the time I eventually file for bankruptcy later this year, it will have been more than 4 years since I last used my credit cards, and more than 3 and a half since my debts all charged off. I didn't make any "luxury purchases" in the time that I had the cards, and I very seriously doubt that the creditors and JDB's would bother trying to challenge discharge now.

[Pjmax]

I think the only only question I was asked that's even close, was: 'When was the last time you used your credit cards?' I remember the TT looked very surprised when I answered 'about 3 years ago.' Don't know exactly what to make of that, I didn't ask, and was trying to keep my answers to 'yes, sir' and 'no, sir.'

[justbroke]

I was reading somewhere on the 'net that a common questions Trustees ask at 341 Meetings are:

1) When did you first consider filing BK?

2) When did you realize you were going to file BK?

3) When did you first contact an BK atty?

The questions I posted are drawn from it.

On what page did you draw these questions from? They are not in the Appendix which lists the "standard" Trustee questions. Regardless, the questions you posted are not typical questions at all; and I have sat through several 341 Meetings (two myself) and have never heard them.

[kornellred]

There are basically two types of debtors who file for Chapter 7 bankruptcy. The first type, which I would assume are the numerically prevalent type, are debtors who have been handling their unsecured debt loads without too much of a problem, and then encounter devastating circumstances in their lives, such as divorce, serious illness, loss of employment, and the like. They may have to use credit to some extent in order to manage their daily affairs, even thought they can detect the inevitability of bankruptcy. They are making a fully conscious decision to spend a creditor's money, knowing that they will not be required to pay it back.

The other type of debtor who files (if they qualify) for Chapter 7 bankruptcy is the profligate spender who knows that bankruptcy will eventually become inevitable. These debtors know far in advance that they will eventually file. They continue to utilize credit until the situation becomes untenable. That is pretty much in-your-face fraud.

Everybody knows this. The only way that creditors can charge a debtor with fraud is if they can actually prove it in a court of law. You have to be pretty ignorant to leave an obvious paper trail describing spending patterns.

When you file for bankruptcy, you are not fooling anybody. Except, maybe, yourself.

[sailing2013]

Here is a link the US Dept of Justice's Chapter 7 Trustee Handbook.

http://www.justice.gov/ust/eo/private_trustee/library/chapter07/docs/ch7_handbook/ch7_handbook_2011.pdf

The questions I posted are drawn from it.

Now, I recognize manuals are not always followed; but, since this is coming directly from the DOJ to Chapter 7 Trustees, I reckon it might carry some weight.

[keepmine]

I was reading somewhere on the 'net that a common questions Trustees ask at 341 Meetings are:

1) When did you first consider filing BK?

2) When did you realize you were going to file BK?

3) When did you first contact an BK atty?

Note, EandG, these questions are asked by the Trustee, not the creditors. And must be answered under oath.

I reckon if you had contacted an attorney, then went on a shopping spree, regardless of how much time had passed before filing, you'd receive suspicious looks!

Don't know where you read that but, those types of questions aren't typically asked at a 341. Those would be more in line at an adverserial proceeding.

[frogger]

Heah, I'll be the first to encourage you to "stick it to them" .

Wow! And "them", may be us............

Karma.

[btbeme]

Karma says that you should not charge if you do not intend or have the means to pay it back. And, if you are asked to explain certain things at your 341, it will be kinda warm and itchy in that room. The courts are packed daily with people trying to prove or disprove intent. Whether they win or lose, there really is only one person who knows what the true intent was at the time.

So I suggest that the easiest path is to not go there. It might hurt at the moment, but the rest of the memory is pain-free. And it keeps you on the right side of both karma and the strictest interpretation of the law.

Certainly, the moment you retain an attorney for filing a BK is the last opportunity to realize that you are bankrupt and have no means to pay back your debts. I am guessing there may have been a moment or two before then that the realization may have hit.

But, hey, some folks like to ride the big surf.

[LadyInTheRed]

2) When did you realize you were going to file BK?

3) When did you first contact an BK atty?

I wasn't asked either of those. I also don't think those are questions that people here often say are asked. But, I am sure those questions would come up if a creditor did object to the discharge of a debt.

[sailing2013]

I was reading somewhere on the 'net that a common questions Trustees ask at 341 Meetings are:

1) When did you first consider filing BK?

2) When did you realize you were going to file BK?

3) When did you first contact an BK atty?

Note, EandG, these questions are asked by the Trustee, not the creditors. And must be answered under oath.

I reckon if you had contacted an attorney, then went on a shopping spree, regardless of how much time had passed before filing, you'd receive suspicious looks!

[EandGWZ]

Thank you Des. I appreciated your response. I wonder what would happen if a creditor showed up at a 341 meeting and ask the debtor, "when did you first contact your bankruptcy attorney?" I don't think it would meet the muster of the law as evidence for fraud but it would be quite difficult to explain to a judge or jury how you planned on paying for purchases after you had decided to file for bankruptcy (inherit conclusion of retaining an attorney's services).