My story - Long Read - Advise Please

[helpmeout]

Hereforinfo, my Net pay is low because in addition to making a 6% 401K contribution, I am also paying off a 401k loan.

Are the contributions to your 401k considered income?

Contributions? Don't know. But the court won't allow a 401K loan payment to be considered when determining expenses in a Chapter 7 (which means that you need to add it back to your net income), I'm not sure about a Chapter 13.

If you are seriously considering a bankruptcy, consult with an attorney.

[helpmeout]

I can't. The idea is I make money off my perdiem, I get more than I spend. Say I spend $400/month on average, and I get $1000/month from my PerDiem on average. I'm making $600/month on my PerDiem, but that is not a consistent figure. I probably didn't explain it very well in my post.


So I understand the 106k is a TOTALLY different story than 30k, but the first page of replies in this thread all sort of imply that you might as well file BK, banks will write-off the debt, and then you can begin amassing wealth...INSTEAD of all the work just to break even. I don't want to go into super-crazy-penny-saver-mode for the next 5 years or so if I don't have to.

I also feel as though it's taking advantage of the system to a degree, but if it's all about staying within the parameters of the law...do I have a case for Chapter 7? And does anyone think the lasting consequences are greater than the potential gain from wiping my credit cards out?

Thanks for your reply, nc70.

From what you have posted, you don't have a Chapter 7 case. The court is either going to want proof that you use the entire amount of the per diem on travel expenses (btw, hope that the IRS doesn't ask for that) and count the rest as income (which it is) or disallow any of the expenses that it covers (such as the $300 dining out) and they will question the $400 a month for a single person in groceries unless you are lumping other items into there as well.

Chances are, if you go the bankruptcy route, you will be put into a Chapter 13. And then you will have no choice but to adjust your budget.

If you can avoid having a bankruptcy on your public records, and you can per your post, it probably is better for you to do so.

[OhioFiler]

bs.
wait about 3 months, and don't use the cards. And then evaluate what is best for you.

don't listen to this moron above, as he is probably a credit card employee or something, and he is silly to say "abusing the system"...how silly, considering all the money we pay in taxes for politicans that throw our money away on crap and bank bailouts.

buzz off hereforinfo.

Uh...this poster hasn't posted on bkforum for nearly 4 months. Perhaps he already buzzed off.

[espo1357]

I'm not in bankruptcy, not anywhere near his situation or yours. I do hold myself to the same moral obligations I am talking about here. I think what he's doing is wrong and you are giving him advice to cheat the system.

You are advising him to go out and spend $500+ per month on a car so he can get out of paying $500/month to his credit card debt (that was racked up on gambling, partying and a recent purchase of a $10k ring). He claims he can't afford to pay $500/month to his credit card bills, but he will be able to afford a $500/month car payment, plus insurance and gas, instead? Plus you advise him to spend more of his per diem, when he claims he already doesn't have any money left over. That makes no sense. He gets $1000 per diem and spends $300 of it, supposedly the rest goes toward his living expenses and bills. You are suggesting he spend at least another $700/month to cancel out the per diem, when he claims he is broke? What bills is he supposed to stop paying so he can spend that $700 on meals while out of town? Obviously not the credit cards if he swaps those payments for the car.

Let's do the math. He can't afford $500/month for credit card bills. But in your plan he can stop paying that and afford $1200 instead?

wow.
high horse.
liar?

Ya, a liar.

do you think people file to abuse the system? maybe they do, but fraud is fraud, and they will be punished.

your logic is flawed.

[espo1357]

I don't think you are a candidate for bankruptcy. You can't go out and charge a $10k diamond ring and then discharge it, that's abusing the system. You have the means to pay back your debt, so do it.

bs.
wait about 3 months, and don't use the cards. And then evaluate what is best for you.

don't listen to this moron above, as he is probably a credit card employee or something, and he is silly to say "abusing the system"...how silly, considering all the money we pay in taxes for politicans that throw our money away on crap and bank bailouts.

buzz off hereforinfo.

[Whittier]

RING.

My ex-fiancee and I purchased a ring in 10/2009 for $3999+tax, he paid $150
on his credit card (his limit was only $2K as he is very conservative with debt and had a secured card with his credit union) and I charge the rest on my (about $2800) D.Jewelry store account. Well lord and behold in December 2009 we break things off after 7 yrs of being together. During the transition of moving out and having people in and out the darn ring came up missing and now I owe about $2,600 since I will file for BK and need to pay an attorney I'm putting the payment ($150/monthly) for the ring toward the attorney I will retain (I don't seem the point of paying for a ring I do not have plus I do not have the means to pay for both). All the attorneys I called won't file my case until paid in full (Los Angeles, CA). So I had to make the decision to put all available monies towards getting my BK filed since now I got stuck with a mortgage alone and two small kids (I fkd up by giving the milk for free , actually we would of gotten married 5 years ago but we ended up using our money to pay for my mom's medical bills......then time just passed us by...........................

I don't want anyone to think I'm pulling anything please....what can I do since I have no ring to return to the creditor and the Trustee will/might ask for it.......it's missing sound weird. But it's the truth.

[AboveMyMeans]

The idea that so many of us have lived BELOW poverty level for many many years to try to pay off our debt and still failed because BK was an appalling option to us, and then someone comes waltzing in admitting to gambling, drinking and frivoluously spending 30K and then wants to BK it after 5-6 months is probably what has provoked most of these responses. This doesn't sound like someone who has struggled through he!! and back to try to pay it and just cannot.

I cannot see how this is relevant. Is there a minimum "stuggle" clause built into BK law now?

Just like a corporation, why not use the law to your advantage. Why live below the poverty line if I don't have to under protection from the law.

And from the creative accounting standpoint...I don't plan on lying to the court (or the FBI, ha!) or anyone. But we all know that you can "plan" for bankruptcy. It's apparent that my situation is not an urgent case. I can keep on getting by just like this for many years if I had to. So I can obviously "plan" for a BK and make my case as appealing and painless as possible.

The piece that I think everyone is missing, is that I'm truly just looking for the path of least resistenance.

Put aside the whole "learn your lesson" aspect, because I truly have learned to cut out the vices that got me to this point. And being as though I will not allow myself to become victim to abusing available credit again...I find myself lucky that I got into this trap (and ultimately out of this trap) at an early enough stage in my life. This will allow many more years (hopefully) of upward potential as I have more time to acquire wealth.

And to silence all of the critics: I have put in motion a plan and a budget that will allow me to pay off my debts in 24 months. My lifestyle will obviously be very simple, less so than it would be under BK protection...but it will be just that, a simple solution. The headache was just not worth only 2 years and $30k.

[DavidSolomon]

Another Angle

I was in your same situation except with $160,000 in credit card debt, $250,000 mortgage and a $23,000 car loan. I weighed all options. I chose bankruptcy for one reason. I wanted my credit problems to be resolved before I am married. Although the bankruptcy is a huge issue and kills your credit. My fiance and I have decided to live a lifestyle free of any debt. We now only pay cash for everything. My credit score was 667 right after Chapter 7 discharge. Now the bankruptcy on the record will effect everything I do, but my score will be fine. BTW I filed before any accounts were late.

[southernbelle]

Do what's best for you, but be careful with "creative accounting". The following article might shed some light.

13 Tips From The FBI Before Filing Bankruptcy
By Rachel Lynn Foley, Kansas City, MO, Bankruptcy Attorney on Oct 4, 2009 in Bankruptcy Crimes

I wanted to share 13 tips from the FBI before filing bankruptcy. I often tell clients that lying to the court is a crime, but often they do not believe me. So many times you will hear of stories of debtors who filed bankruptcy and did not disclose assets such as a boat, land or collectibles. These debtors often got away with discharging the debt and keeping the asset. Notice that I specifically identified the past tense in that sentence. The days of playing hide and seek with assets or creditors in bankruptcy are long gone.

These stories make it incredibly difficult to convince the client that they must list all their assets and all their debts. So please allow me to share the 13 tips as I want to make it perfectly clear that lying on your bankruptcy petition or schedules can land you in prison.

Here are 13 tips to keep in mind before filing for bankruptcy:

1. All creditors must be listed, even the ones you intend to pay after the case is filed.

2. Many assets are protected from being seized by the bankruptcy court, but only if they are listed. It is a crime not to list all property.

3. Part, or all, of any tax refund due for the tax year a bankruptcy case is filed may be required to be turned over to a bankruptcy trustee. Any refunds that are due for previous years may be required to be turned over.

4. You must list all business information if you are self-employed. If you are in business you must list all personal and business debts, assets and income.

5. All income must be reported, including Social Security benefits, family support, alimony, unemployment, and pensions.

6. Intentionally incurring debts with the intent not to pay may be a crime.

7. You should maintain payments on all secured property that you wish to keep that could be repossessed before the case is filed. This includes house payments, car payments, furniture payments, equipment, and other items used as collateral.

8. The court may disallow a bankruptcy if you misrepresent any facts or otherwise lie on the papers filed in court for the bankruptcy.

9. Bankruptcy stops all bill collectors. Creditors, including tax collectors, are barred from attempting to collect any debt from you the instant the petition is filed. This protection is permanent for all discharged debts. Bankruptcy does not stop any criminal proceeding or government regulatory proceeding.

10. Bankruptcy does not clear up a credit report. It may be reported on credit reports for 10 years.

11. You cannot dismiss a Chapter 7 case without court approval. You can voluntarily dismiss a Chapter 13 case anytime.

12. A secured creditor may add the attorney fees they incurred to the balance owed on the property. This may happen even if you are not behind on payments at the time the bankruptcy is filed. Most mortgages and other loan documents provide that reasonable attorney fees are allowed and will be added to the balance due on a loan.

13. Bankruptcy crimes carry a punishment by, among other things, imprisonment for up to five years. It is a bankruptcy crime to: conceal property from the court or bankruptcy trustee; knowingly and fraudulently make a false oath or account; knowingly transfer or conceal property to defraud creditors; conceal, destroy, mutilate, or falsify records or documents; and file a bankruptcy petition to deceive or defraud.

Every week I see more cases being sent to the U.S. Trustee to review for claims of bankruptcy fraud. Bottom line, do not lie on your bankruptcy petition. You may get away with it but is it worth taking a chance in committing perjury and paying a fine of $250,000 or spending 5 years in prison? If your answer is no then do not lie to your attorney. We cannot protect you if you lie.

Remember that knowledge is power and bankruptcy is not a game! The more knowledge you have the more power you will have to avoid bankruptcy crimes.

Written by Rachel Lynn Foley, Kansas City Missouri Bankruptcy Attorney.


Link: http://www.************************/...tcy/#more-9822

Good luck.

[needachance]

With your income and your amount of debt, by cutting down on some expenses that I can see a lot of holes in, you could easily pay off this debt in probably less than 5 years. I don't see, looking at your numbers, that even with "creative accounting" how you think you could qualify for a 7, and besides, an engagement ring would be an asset. They asked us if we had purchased ANY jewelry in the past 24 months.

I really think that you will learn more from this situation if you pay it off and have some personal sacrifice in order to do so. You admitted you have only been paying on it for 5-6 months, not long enough of an effort in my opinion. Get on a bare bones budget and see how much you could pay off and how quickly.

The idea that so many of us have lived BELOW poverty level for many many years to try to pay off our debt and still failed because BK was an appalling option to us, and then someone comes waltzing in admitting to gambling, drinking and frivoluously spending 30K and then wants to BK it after 5-6 months is probably what has provoked most of these responses. This doesn't sound like someone who has struggled through he!! and back to try to pay it and just cannot.

Of course, that is just my opinion, so take it for what it is worth, but I think you would learn more by paying this off and with the income you list you could certainly do it. If you need budgeting advice look into some financial books like Dave Ramsey, he is the king of paying off debt.

[BK_Broiler]

Thing will never get better if you are always looking behind you and blaming others for your current situation. It's easy to blame the "big banks" for the economic mess that has recently plagued our country, but the fact is each of us has to take responsibility for more than ourselves.

We are in the economic hardships because of greed and selfishness. There are plenty of ways to cheat the system, perform creative accounting, whatever you want to call it. Not just in bankruptcy, but in many aspects of our lives.

Things don't just get better when your debt goes away. If you have an attitude that permits future acts of questionable morality and selfish motives, you will surely find future hardships. Sadly, the selfish among us end up hurting those that have honorable intentions and limited means.

[poorold]

nc73,

I'm sorry but I don't quite understand the following comment: "Leave bankruptcy for those that are in dire need. It's really not meant for someone that refuses to live frugal for 3-5 years."

What Section of the Bankruptcy Code requires this.

Furthermore, along those lines of thinking, shouldn't there be no Chapter 7? After all, I'm sure everyone can afford to repay some/all of their debts if they live frugally. And along the same lines of thought, perhaps the 5 year repayment plan under Chapter 13 ought to be removed and you pay for the rest of your life.

No cable, no TV, no cellphones, no car valued at more than $1,000 (and only if actually necessary to commute because public transportation is not available), no air conditioning, in the winter you are forbidden to have the heat above 40 degrees (just to keep the pipes from freezing, if you are cold, put on another sweater). And, you can only shop at stores designated for bankruptees--day old bread, items near expiration, dented cans.

And, of course, absolutely no eating out or vacations for the rest of your life.

[nc73]

I think what everyone's trying to tell you is that it's in your best interest to pay the debt without filing. Why have bankruptcy on your record when looking at the numbers it appears that you CAN pay the debt off without much trouble. We really don't care if you file or not but you posted here for opinions and you got it. Leave bankruptcy for those that are in dire need. It's really not meant for someone that refuses to live frugal for 3-5 years. It seems you had your mind made a long time ago, so why did you even post?

[joh]

Talk to a lawyer, keep in mind internet advise is only worth the paper it's written on.

[AboveMyMeans]

Thanks StartingOver08, very logical advice.