Charges considered fraud?

[okane]

Is it true that any charges you make after talking to an bankruptcy lawyer is considered fraud? How do they know that you spoke to an attorney before the charges?

[StaciMM]

Technically-yes. Consulting w/ an attorney regarding bankruptcy generally means you are not going to be paying back you credit card debt. Making additional charges that you do not intend to pay back is considered fraud.

How would the creditors know? Most likely they wouldn't.

Is it true that any charges you make after talking to an bankruptcy lawyer is considered fraud? How do they know that you spoke to an attorney before the charges?

[irastus]

The bankruptcy code presumes you are out of money 90 days before filing. Therefore, any credit card charges etc. done in that period can be deemed fraudulent - meaning you did not intend to pay them back. This includes cc balance transfers. The creditor could sue you in bankruptcy, pulling the fradulently obtained debt out of bankruptcy, and hold you liable. It's rarely done for small sums, but is still a risk. The risk is heightened with purchases and no payments during that time frame. The typical lawsuit involves Joe Blow who figures he has to file BK, and goes out and buys tons of consumer electronics right before filing. Not a good idea. This kind of "fraud" can still be discharged under a chapter 13 - until the code changes.

[hhou812hh]

The bankruptcy code presumes you are out of money 90 days before filing. Therefore, any credit card charges etc. done in that period can be deemed fraudulent - meaning you did not intend to pay them back. This includes cc balance transfers. The creditor could sue you in bankruptcy, pulling the fradulently obtained debt out of bankruptcy, and hold you liable. It's rarely done for small sums, but is still a risk. The risk is heightened with purchases and no payments during that time frame. The typical lawsuit involves Joe Blow who figures he has to file BK, and goes out and buys tons of consumer electronics right before filing. Not a good idea. This kind of "fraud" can still be discharged under a chapter 13 - until the code changes.

Yeah the further back the charges were the less chance they will dispute. They have to pay their atty fees and yours if they dispute anything and they lose which is why they rarely dispute anything.
I wonder if this is changing under the new laws too.

As for ch13 it's possible for the courts/US Trustee to dismiss your bk with large purchases since this constitues a "bad faith" filing unless you propose a 100% payback which probably defeats the purpose of filing in the first place. Plenty of months between the last major purchase and the filing date in any chapter is the only thing that will reduce the chances of anyone disputing anything.

[HHM]

As to the question of how would the know "when" you consulted an attorney, they could ask you at the 341 meeting while you are under oath.

[bezoar]

Or, if the att'y you consulted with also just happened to be the trustee assigned to your case (yikes!) - as unlikely as that may be...

[hhou812hh]

Or, if the att'y you consulted with also just happened to be the trustee assigned to your case (yikes!) - as unlikely as that may be...

In the rare event this would happen they probably couldn't do or say anything as this would be a conflict of interest.

[hhou812hh]

As to the question of how would the know "when" you consulted an attorney, they could ask you at the 341 meeting while you are under oath.

Has this ever come up? I read somewhere where a discharge was denied for this reason, so I guess it does.