January 29, 2012
If you are considering bankruptcy and have used credit cards recently, you may be worried about being accused of fraud by a credit card company.
For starters let's look at what the Bankruptcy Code states:
[11 USC §523(a)(2)(C)(i)(I),
(I) consumer debts owed to one creditor and totalling more than $500 for luxury goods or services incurred by an individual debtor on or within 90 days before the order for relief under this title are presumed to be nondischargeable.
(II) cash advances totalling more than $750 that are extensions of consumer credit under an open end credit plan obtained by an individual debtor on or within 70 days before the order for relief under this title, are presumed to be nondischargeable.
The majority of us do not wake up one morning and decide "Oh I think I'll file bankruptcy today". The decison for most is made after a long drawn out process that usually takes place over many weeks, months and sometimes years. During this time frame credit cards are often used to bridge the monthly budget gap and moving money around from credit card to credit card by convenience checks and balance transfers(convenience checks as well as balance transfers are conisered cash advances).
Charges of fraud as it relates to purchases and cash advances by credit card companies are rare unless they are obviously fraudulent or unless they are for an amount that makes it worthwhile for the credit card company to initiate and carry through with a lawsuit.
If you have made some large purchases, transfers or advances recently and have now decided to file for bankruptcy, you may want to play it safe and:
1.Pay at least pay 2-3 minimum monthly payments. This will show to some degree that you intended to pay your bills when you made the purchase, transfer or advance.
2.If you have transferred a balance or used a convenience check to transfer a balance of more than $7,000 you probably will want to make at least 6 minumum payments and wait a year before you file.
It most likely is going to take something around the $7,000 range or more for it to be worthit for a credit card company to dispute a transaction(s) and claim bankruptcy fraud. Keep in mind, the credit card company can only dispute the portion of the total balance which it believes is fraudulent. If the judge rules in their favor only that transaction(s) will not be able to be discharged through bankruptcy.
If the credit card company decides to file a lawsuit it is called an Adversary proceeding. A judge hears the case and makes a ruling.
Keep in mind, you will be under oath at your 341 meeting and even if none of your creditors show up at the meeting, you still could be asked specific questions about specific credit card transactions by the Trustee. It is best to stop using credit cards immediately after you have made the decision to file for bankruptcy. This will alllow you to be 100% honest at your 341 meeting and avoid having your case delayed or thrown out due to bankruptcy fraud. Using credit cards with no intention of paying them off is by definition, fraud. It is best to look at the "total picture" of your bankruptcy and the fresh, debt free start it will provide. You have other things to focus on such as saving up to purchase a house or perhaps you'll need to rent after bankruptcy. So the advice here is to play it safe with your credit card usage. You will prevent a lot of stress during your bankruptcy and make it more likely your bankruptcy will be fully discharged on time without problems.
January 5, 2012
There is no doubt that if you are carrying a burdensome amount of credit card debt you have heard about or perhaps even looked at debt consolidation.
In as few words as possible. Don't do it!
There are better ways to get out of debt without bringing a third party into the equation. What a debt consolidation company is going to do is this. They are going to negotiate settlements with all of your credit card companies and pay off the balances. Then you are going to make one payment to the debt consolidation company to pay them back for the amount they paid for you. Sounds good on the surface but on top of that, you are going to pay the debt consolidation company their fee for their service plus the interest rate they choose to charge you.
The bottom line is this. Everything that the debt consolidation does for you, you can do yourself and save yourself A TON of money.
Credit card companies are not going to settle an account for less than owed unless the creditor is behind on payments. Hence, your credit has taken a major hit already and there is nothing the debt consolidation company can do about this. After missing several payments, the credit card company is going to be just as willing to settle your account with you as they would with a debt consolidation company. Maybe even more so with you.
For the purpose of this article we are assuming that you are already behind on payments. Make a contact list of all of your creditors and start the process of making phone calls. Get your call routed to the appropriate department and start talking! You will be surprised at how willing the credit card companies are going to be to work with you. If you are able to negoiate a settlement for an overdue account, remember these 2 things.
1. Get everything in writing before you send any money and make sure the words "Settlement in Full" is in writing on the document.
2. Never give electronic access to any accounts. Make any and all settlement payments with cashier checks and keep copies of EVERYTHING in a safe place. You may need it at some point.
Obtaining settlements from credit card companies can be tedious, frustrating and time consuming. This is why many people opt for a debt consolidation company. Look at it this way. If it takes you 100 hours of work and you save $5,000, you have in a sense, just made $50 an hour for your part time work. Well worth it for most of us. So before debt consolidation and/or bankruptcy, look into settling your accounts on your own, you can always opt for the latter choices down the road if you think you must.
January 4, 2012
It is important to know the Bankruptcy Exemptions for your particular state. Click on your state below to see what you are going to be able to keep and will have to give up in your bankruptcy.