Do people actually max out cards before filing ? If so, can they get caught? and how?

What are some of the new ?

 

  • Do people actually max out credit cards before filing bankruptcy? 9:01 am on December 21, 2009 Permalink |

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  • Lesley 8:02 am on December 21, 2009 Permalink |

    I’m sure there are people that do because they don’t listen to their attorneys tell them how stupid it is to do. Yes they can get caught, and invariably do. The second the credit card gets notice of the bankruptcy, it takes them two seconds to find out what the person did on their account before filing. It isn’t exactly that hard to get caught and punished. Once they figure that out they have their attorneys file an adversary proceeding and object to discharge. This is NOT a rare occurrence. And this happened before the new law was even passed.

    Changes made in the new law:
    1. Instead of 6 years between two chapter 7’s it is now 8 years
    2. You are required to do credit counselling prior to filing and debtor education classes after (both can be done online and have to be with an approved provider by the US Trustee.)
    3. Under the old law trustees would be looking to see if you spent $500 in the past 60 days rather than $600 in the past 90 days on unsecured debt to determine if they will go after that creditor to get the money back due to it being a preferential payment.
    4. There is a means test which looks at your income versus the median income for your locale and family size. If you are above the median there are various factors looked at to determine if filing a chapter 7 would be a "presumption of abuse." It makes filing a chapter 7 SLIGHTLY harder, and requires documentation of all your income from all sources in the past 6 months.
    5. Also, what is known as the superdischarge in a chapter 13, is less of a superdischarge (essentially the discharging of debts nondischargeable in a chapter 7 like taxes, child support arrearages and restitution are not so dischargeable anymore in a chapter 13).

    If you are thinking of filing you need to consult an attorney.

  • Jill S 8:02 am on December 21, 2009 Permalink |

    The poster above is wrong here. I just completed my ch. 7 bk which was all credit cards. I was using my cards up until a week before I filed. When I filled out the paper work for the lawyer, it asked when I used my credit card last, and for what? I was honest, I said a week ago I used the card for paying my car insurance, and my kids used the card to buy a couple of things on eBay (under $50 each). The judge goes back 90 days to see you history of your credit cards, and the lawyer said as long as you didn’t do cash advances, or bought luxury items (furniture etc.) there would be no problem. There is a big big sign over where the judge sits stating that if you do anything which constitutes any kind of fraud you will be prosecuted to the fullest extent of the law. Be honest with your lawyer, he will tell you whats the right thing to do and say. Any questions feel free to email me at hansjill228@optonline.net.

  • Dr. Deth 8:02 am on December 21, 2009 Permalink |

    you pretty much can not get any credit card debt discharged anymore – and even before the changes – they would ignore any charges run up at least the last 6 months before you filed for bankruptcy – you would still have to pay those recent charges in full or you could just volunteer and go to jail for fraud

  • peilthetraveler 8:02 am on December 21, 2009 Permalink |

    Once i KNEW i couldnt pay my debt, I maxed out my credit cards. I actually paid for my bankruptcy ON my credit card. You really need to wait 90 days though after your last credit card transaction to file BK though. When i filed i got all sorts of letters from lawyers accusing me of fraud and asked me to sign a piece of paper saying i would pay back the money. I didnt sign and i never heard from them again. I did alot of cash advances though, I didnt actually put alot of items on my credit card. Then I told the judge that i gambled it, but i actually lived on it for several months after my BK was filed. This was many years ago though before all the laws changed. I would never try anything like that again now though.

  • Phurface 8:02 am on December 21, 2009 Permalink |

    It’s a lot harder now to file bankruptcy. It would depend on the judge, but if someone maxes the cards out, the judge might order them to return everything.

    Phurface

  • Christina B D 8:02 am on December 21, 2009 Permalink |

    Some people do… and get in trouble for doing so. If the judge handling the case realizes you did this, he can exclude those amounts from the settlement.

    If you’re considering filing for bankruptcy, visit the below website for help

  • SPIFIMAN1 8:02 am on December 21, 2009 Permalink |

    People used to do this some, but if you get caught it’s considered fraud and you can be prosecuted for it, at the very least the judge will not allow it to be included in your BK.

    I have posted a link that has a ton of information on the new bankruptcy laws and even has a test to see what chapter you can qualify for.

    http://www.bcsalliance.com/index.html