Bankruptcy FAQs

Question

This information is not legal advice and I am not a lawyer. Always seek a reputable bankruptcy lawyer to answer your questions prior to filing.
- Tuscani
Should I file Bankruptcy?
A person should file a bankruptcy if, and only if, he or she can’t pay bills as they come due or is about to lose property or have property attached by the Court. Very few people lose any property when they file bankruptcy.
Filing a bankruptcy is generally better than having a foreclosure on your credit record. A person will often be able to rebuild credit and buy a house within 2 years after a bankruptcy. A repossession can do more damage to your credit, and it may take much, much longer to recover. Government regulations may forever keep you from financing a home with the VA or FHA if you have a repossession for a home, but allows financing 2 years after bankruptcy. Only 7 magical items may not be bankrupted: Child Support and Alimony; taxes less than 3 years old; federally guaranteed student loans; debts due to fraud; debts due to drunk driving; debts due to intentional injuries; and criminal restitution. There are many exceptions to even these. A driver’s license can be reinstated by filing, if you lost your license because of unpaid damages for an auto accident. When in doubt, always list the debt when filing: It may be bankruptable due to an exception.
What does it cost to file bankruptcy?
After October 2005, Court costs are about$300 for a Chapter 7 and $275 for a Chapter 13. After October 2005 Chapter 7 attorney fees run about $1000 plus any filing fees. Chapter 13 Attorney fees are set by the Court.
What happens when I file?
When you file a bankruptcy, a Court order goes into effect immediately stopping all collection activity. This includes stopping foreclosures, attachments, garnishments, and Creditors calling you. The sooner you come in to the law office, the sooner you can get relief—and the more you can save from Creditors. You will have a 341 hearing within about 4 to 6 weeks after the bankruptcy is filed. When the bankruptcy is finally over, a discharge is issued. This is a final and permanent order to stop all collection activity and declaring the debts to be non collectable. Bankruptcy does not normally get rid of a security interest that you gave to a Creditor such as a mortgage or a standard car lien, but it does make you not liable for the debt.
Can I plan my bankruptcy?
Of course! Good planning is why you read this thread and allows you to save more money and property. Just like taking proper tax exemptions. There is nothing illegal or improper with properly taking the exemptions.
Which bankruptcy is right for me: Chapter 13 or Chapter 7?
A Chapter 13 is like a bill consolidation loan, and you normally file it to keep property and stop foreclosures. A Chapter 7 is used to completely wipe out unsecured debts and to get rid of secured debts for property you don't want to keep. Both will stop garnishments and Creditor harassment. If you earn more than the average wage for your state and size of family you will normally be required to file a Chapter 13.
Chapter 13 cases are becoming more popular. Over 95% of all Chapter 13 cases used to fail because they became unaffordable. But now 10 and 20% repayment plans are being approved in Chapter 13 cases and they are now more successful. After 10-2005 plans below 10% will be common. Often an attorney may want to file a Chapter 13 because he or she will earn more than he would in a Chapter 7, but you will usually profit far more from filing a Chapter 7. Usually, the only times you will want to file a Chapter 13 are 1) when you have already filed a Chapter 7 and can't file another one or 2) if you have so much property and equity that a Chapter 13 is necessary to keep that property.
You may have to file a Chapter 13 if you have so much income (after you pay your normal monthly living expenses) that you can repay something to your debts. A Chapter 13 can no longer be used for special purposes, such as to debts due to fraud. But can repay child support, repay student loans, or protect a co-signer. The fortunate thing about virtually all Chapter 7 cases is that the Debtor’s assets are normally exempt, so there are rarely any assets to liquidate.  Each state has different rules for what property can be kept.
Why file a Chapter 7?
If you have substantial unsecured debts you may want to file a Chapter 7. You may also want to file a Chapter 7 if you want to surrender property and not owe for it. You can usually keep all your property in a Chapter 7, because you won't have enough equity in any property to exceed the exemptions allowed.
Why file a Chapter 13?
You may want to file a Chapter 13 if you have secured debts and are threatened with foreclosure or repossession, if you filed a Chapter 7 less than 6 years ago, if you wish to protect your cosigner, or if you have debts that are not dischargeable in a Chapter 7 but are payable in a Chapter 13. Child support can be paid first in a Chapter 13 before secured creditors giving you the advantage of not losing a car or property but having all of your payments go to child support at the start of the case.
Can I convert from a Chapter 13 to a 7 or from a 7 to a 13?
Yes they can be converted. Few people convert from a 7 to a 13. However if you earn over 60-70,000 you have a strong chance that the US attorney’s office will file a 707 b motion that may force you into a 13. If you file a Chapter 13 you have a good chance that you will have to convert from a 13 to a 7. Over 3-5 years, you are very likely to miss payments and have the Chapter 13 dismissed (or have to refile). Some Chapter 13 cases are never finished and are converted into Chapter 7 cases. If you are close to completing the plan, you may be granted a hardship discharge. Plans can also be later modified if incomes change.
What is a Chapter 20? What is a Chapter 26?
Some people file a Chapter 7 to wipe out unsecured debts and then file a Chapter 13 to keep their property. This is jokingly referred to as a “Chapter 20”. Filing a “Chapter 20” can be the intelligent and affordable way to file a Chapter 13 later. Filing a Chapter 7 and then a Chapter 13 to obtain the benefits of both is very effective in stopping a foreclosure. A “Chapter 26” refers to filing back-to-back Chapter 13 cases. You would do this to pay debts that can’t be paid in 5 years by just one Chapter 13. In a sense, you are “extending” your repayment time by filing two Chapter 13s. These forms of filing are no longer available after 10-2005.
How long will bankruptcy take?
It will take about 3 to 4 months for a Chapter 7 to be final. (You will get a letter within 10 days of filing, telling you the time and date of the 341 hearing. This hearing will be held about 4 to 6 weeks after you file.) A Chapter 13 will take as long as the repayment plan takes. If you file after 10-2005 before getting a discharge you will attend a hearing.
What are the most common mistakes I can make when filing?
Not showing up for your hearing and not listing all of your debts. Fail to show up at the hearing, and your case is dismissed. Fail to list a debt, and you continue to owe it. Also people often have too much in a checking account when they file or a tax refund coming. The best policy is to list all your debts and assets. Always list every debt, even if you think it is nondischargeable, it may be discharged anyway. Even include last month’s utilities.
How do I qualify for bankruptcy? Can I not be approved?
You qualify for bankruptcy if either your outgo exceeds your income or your liabilities exceed your assets. You basically have to be a US citizen, reside in the state you file in, and not have filed within certain time periods (you can’t file two Chapter 7s within 8 years of each other).
 What if the Court does not approve my Chapter 13 or Chapter 7?
 If there is anything wrong with your Chapter 13 or Chapter 7 bankruptcy it will usually be changed and amended. Of course, it is less costly and time-consuming to do it right the first time. If you earn so much money that you can afford a Chapter 13, you will be forced to change it from a Chapter 7 to a Chapter 13. Repayment plans often are amended.
How often can I file?
You can file a Chapter 7 8 years after you filed your last Chapter 7 the time used to be 6 before 10-2005. The time is measured from the time of filing your first case to the time of filing of your second case. You can file Chapter 13s 2 years after a Chapter 13 discharge. You can file a Chapter 7 4 years after a Chapter 13. You can only have one bankruptcy going on at a time.
If I file does it mean my old bad debts are erased from my credit report?
NO!
What is reported is that you had a debt and that a bankruptcy was filed. Bankruptcy does not give you a good credit record or “repair” your credit record automatically. You repair your credit by paying your debts on time after the bankruptcy.
Can I file without an Attorney?
Yes. You can file a bankruptcy yourself, and this is called “filing pro se”. You can also do dentistry on yourself, but I wouldn’t recommend it. Doing your own case is a very bad idea. This thread alone won’t give you the knowledge you need to file on your own. Use this thread to educate yourself, so you can find a good Attorney and discuss the issues.
As an example, if you file a reaffirmation and represent yourself, it must be approved in a hearing by the Judge, and that will mean extra hearings and time for you. Considering the time and risk involved, I recommend you use an Attorney. You may lose far more in Court than what the Attorney would have cost—plus there is the extra time and effort on your part doing the work.
What about a Bankruptcy Mill?
Filing a bankruptcy through a Bankruptcy Mill or paralegal may be even worse than doing it yourself and they often charge as much as the attorney. Many people have lost thousands of dollars with these businesses—through intentional scams or just plain bad work. Non-Attorney bankruptcy petition preparers are barred by law from providing you with any legal advice. In enacting legislation governing bankruptcy petition preparers, Congress stated: “These preparers lack the necessary legal training and ethics regulation to provide [legal advice and legal services] in an adequate and appropriate manner. These services may take unfair advantage of persons who are ignorant of their rights both inside and outside the bankruptcy system.”
The bankruptcy petition preparer's role is limited by law solely to typing. Unlike an Attorney, a bankruptcy petition preparer can not help you understand the law, advise you how to answer questions, assist you in planning, or be in Court. Federal law requires that bankruptcy petition preparers sign any documents they prepare; print on the document their name, address, and social security number; and furnish you with a copy of the document.
A bankruptcy petition preparer may not sign any document on your behalf, may not use the word “legal” or any similar term in any advertisement, and may not receive any payment from you for Court fees. The bankruptcy petition preparer is also required to disclose to the Court the amount of any fee you pay. Beware of any bankruptcy petition preparer who does not comply with these requirements an emergency, even the filing fee can be paid in payments to the Court.
What paperwork do I need to bring to my Attorney?
Bring the names, amounts, account numbers and proper addresses of all of your Creditors. You may estimate the amounts. After 10-2005 you must have the account numbers. Credit bureau reports normally don't have the addresses on them. If you have gotten a Credit bureau report before filing, you still have to get the addresses.
Can I file jointly with my spouse? Does my spouse have to file or sign if I want to file individually?
Yes, you can file jointly. No, your spouse doesn't have to file but, if most of your debts are joint debts, he or she may want to. There is no need for a spouse to file if the debts are not in his or her name. If you are filing a Chapter 7, and the bills are also in your spouse’s name, he or she generally should file to be protected. (Cosigners are protected in a 13 with 100% plans, but are not in a Chapter 7.) There should be no additional charge for a spouse filing, but some firms charge extra. The only extra work to do in a joint filing is adding an additional name and social security number to the petition.
Will it affect my spouse’s credit? Is he/she responsible for my credit cards if he/she is an authorized user?
No, filing will not affect your spouse's individual credit, but if he or she is a co-signer on any debt that is not paid that will affect him or her. The fact that you filed bankruptcy does not appear on a spouse's credit report unless he or she also files bankruptcy. Unless your spouse has signed to be legally responsible, they are not responsible. However, many credit card companies will argue that she is responsible. They may even put a “no pay” on her credit report if the amount is unpaid; however, she may ask any credit reporting service to correct that.
If she does so, the credit card company will have to show that she signed for it. If they can’t, it will be removed from her credit report file. In other words, the credit card collectors may try to collect from her by claiming she is liable, but she really is not. If they damage her credit record, it may be grounds for a lawsuit. Credit is normally granted based on a score from your past payment history, the amount of debt that you owe, the length of time you have been repaying present credit, if you have opened credit recently, and the types of credit accounts you have.
Will my co-signers be protected?
Co-signers are protected only in a Chapter 13 to the extent that the plan pays the full amount of the co-signed debt. If the plan pays the debt completely, the co-signer is protected, but it will be listed in his or her credit record as being paid late. The Creditor may ask the cosigner for any remaining portion of the debt if it not paid completely. In a Chapter 7, the co-signer will have some small protection regarding the collateral during the proceeding, but only because the Creditor can’t go against the property of the estate. After a Chapter 7 is over, the Creditor will proceed against the co-signer personally.
Can I file a personal bankruptcy and not have it affect my business?
If you own your own business, the business is a part of your assets. If it is worth very much, it may be property of the Court. If your business files bankruptcy, it won’t affect you because the business does not own you.
Can Bankruptcy stop foreclosures, wage assignments, help me get my license back from an uninsured accident, stop evictions, a judgment, or remove a lien?
Yes.
What will happen to my bills?
When you file a bankruptcy, a Court order goes into effect that keeps Creditors from legally collecting from you. When you are discharged (i.e., the bankruptcy is final), the Creditor "charges off" the debt and gets a tax deduction for the loss. The bill is not paid, and the debt shows up as a bankruptcy charge-off on your credit report. Some Creditors will attempt to get around the law and will continue attempts to collect after the bankruptcy is filed. They can be sued for this, but you need to prove they did it. One of the best methods is to record their call and then surprise them in Court with it when they deny ever making the call. Most Creditors that ignore the law will never send you letters or anything on paper after you file, but they may make phone calls hoping that you will pay anyway.
What if I keep getting bills?
You will continue to get some bills from bankrupted debts after you file. What happens is that the Bankruptcy Court sends out notices to the addresses that you give to them (that is why correct addresses are so important), but some Creditors never get these notices and continue to bill you. You should make copies of your hearing notice. If you get a bill from a Creditor, send them a copy of the bill and the notice. Some Creditors will continue to send bills even if they receive notice. It may be that their computer can’t stop sending out the bills, or they may simply be ignoring the stay hoping that you will pay anyway. You can file a motion for contempt with the judge, and you may also be able to sue for a violation of the Fair Debt Collections Practices Act.
Do I have to pay my bills during the Chapter 7 or 13?
No. Don’t pay any bill until after you file a Chapter 7 until you have negotiated with the creditor to keep the property. Don’t pay any payment in a Chapter 13 unless it is the regular monthly mortgage payment or car payment, and the 13 was filed to catch up the arrearage. A stay is a federal Court order to stop. If the item is secured, your overdue payments will continue to add up while you don’t pay on the item. However, the Creditor can't take the collateral until the stay is terminated. If no reaffirmation is filed within 45 days after the bankruptcy is filed the stay terminates and the bank can take the car.
The Creditor may also file a motion to terminate the stay after the bankruptcy is filed. Bankruptcy stops your obligation to pay, but the Creditor still has a lien and rights in the property. You often quit paying for items when you file so that you have time to decide if you want to workout a repayment, redeem, or surrender. I have rarely ever had a bank refuse to agree to repayment, but you don’t want to make payments if they aren't going to let you keep the property. Singing a reaffirmation will make you liable for any deficiency if you have it repossessed later. In some rare cases, with people who are never going to repay, the bank may refuse to reaffirm. Some credit unions may refuse to keep a car or mortgage unless you also repay their credit cards. In cases like this, you may want to redeem property instead. That is why you don’t want to make payments just before or after you file. You can take the time to negotiate your options. You don’t have to be caught up on your payments to reaffirm, but some banks may request it—and all of them want it.
Who notifies the Creditors and bill collectors?
After the bankruptcy petition is filed, the Court mails a notice to all the Creditors listed in the schedules. This usually takes 1-2 weeks.
Do I have to go to Court?
Not exactly, but you will have to attend a hearing presided over by the bankruptcy Trustee. This hearing is called the 341 Hearing (Meeting of Creditors). At this hearing, the Trustee (who is an Attorney) will ask questions, under oath, regarding the content of your bankruptcy papers, assets, debts, and other matters. It is very much like a deposition, not like a trial. If you can’t attend (example: if you are in the service overseas), you can answer the questions by Affidavit. The Trustee is not the judge. He is there to take any assets from you, if he can, and to check the accuracy of your paperwork. The Trustee represents the banks—not you. In a Chapter 13 you will have a second hearing to get your discharge if your case was filed after October 2005. In this hearing you must show that you are no charged or convicted of a crime of fraud or further behind in support.
Where is my 341 hearing?
Your 341 hearing is always at the Federal Court closest to you.
What do I wear to the hearing?
Don’t wear cut-offs or jeans with holes in them and don’t wear sandals. Suits are not required, but dress properly for a hearing in Federal Court. Children are not supposed to be in the hearing room. Do not borrow and wear flashy jewelry. This is not the time to brag about how rich you are or how much you own. The Trustee is looking for assets to take from you. He is not your friend. He represents the persons that you owe. You must report what you own and it’s real value, but don’t brag about your income and how much your car is worth—especially if you don’t have any.
When should I file tax returns if I am going to file bankruptcy? If I file in December do I keep my refund?
If you are considering filing a bankruptcy, you must file your tax returns. No file returns…. no file bankruptcy. If you can get your refund before you file. If you do and spend it, you will keep your refund no matter how much it is. If you get your refund after you file bankruptcy, and the refund is over the exemption, you may lose part of your refund. File a quick refund if you have to or apply any refund amount to next year’s tax debt. If you are considering filing in the later part of the year, file before December. If you file in January, you may have to wait for some time after you get your refund back. You will be asked when you got your refund and how you spent it if you got a large refund.
Message Edited by Tuscani on 10-01-2007 12:47 PM

Answer 1

Can I pay some Creditors and not others in a Chapter 13?
You can’t (shouldn’t) discriminate and pay one unsecured Creditor class differently than other unsecured Creditors in that class. However Secured unsecured and priority debts are paid differently.
Should I try a Debt Counseling Service instead of filing bankruptcy? How do Debt Counseling services work?
"Debt Counseling Services" are often high-interest loan companies. Other times, they are agencies that pocket 10-50% of the monthly money that you pay to them as fees for their "counseling". Most of these services will combine your bills and send a partial payment to each bill that you owe. Your credit will be listed by the credit card companies as delinquent for sending in partial payments, and the reduced amounts sent in may not even cover the interest that a debt charges.
These "Counseling Services" are often simply rip-offs that pretend to be charities or helping agencies. If you pay a debt counseling service $100 a month, what happens is that they take up to $40 for themselves and then send your Creditors $60. Your bills fall even farther behind. Eventually, Creditors file lawsuits and you are forced into bankruptcy anyway. Very few of these "repayment plans" work and over 90% fail, leaving you worse off.
Another scam is that some debt counseling companies will charge thousands of dollars by promising to find you a consolidation loan as a loan broker or mortgage broker. These loans end up being at a high-interest rate or they pocket your money and never give you the loan. Others strip the equity from your home. Whatever method used, "Debt Counseling Services" are often scams meant to take your money when you are already in trouble.
Also be wary of using services that claim to “repair” your credit file. Some may attempt to create a new credit file by getting a new social security number. Changing your identity is a felony, especially if you steal another person’s identity. Creating a false identity and using it may also be a felony.
Admin note:  Please also be aware of the following excellent information provided by National Foundation for Credit Counseling on what to look for when considering credit counseling:
How to Select a Legitimate Credit Counseling Agency 
The last thing a consumer needs when struggling financially is to fall into the hands of an unscrupulous credit counseling agency.  If you’re considering using a credit counselor, shop around, and ask each agency the following questions.  More importantly, be certain that you are comfortable with their answers before you book that first appointment.  A legitimate agency is always more interested in your bottom line than theirs.
Is the agency affiliated with a national body such as the National Foundation for Credit Counseling (NFCC) that requires strict quality, financial and ethical standards for membership?  Examples of such requirements are annual audits by an independent CPA, written action plans provided to each consumer, and consumers provided with statements at least quarterly.
Is the agency accredited by an independent third party?  Self-accreditation is not the answer you want.  An example of a reputable third party accreditating body is the Council on Accreditation (COA).  Such accreditation signifies that appropriate checks and balances are in place to protect you, the consumer.
Is the agency a 501(c)(3) nonprofit community organization?  Being a nonprofit does not guarantee that the agency is legitimate, but it is a step in the right direction.
What is the composition of their Board of Directors?  Board members should not be paid by the agency, should not be family members or friends, but should represent a wide cross-section of the community and civic interests.
What services does the agency offer?  A wide-range of services is a good sign.  This could include: budget counseling for those who are not in debt; debt counseling for those who may need professional assistance digging out; housing counseling for pre-rental, pre-purchase, first-time homebuyer, reverse mortgage, and foreclosure prevention; and the mandated bankruptcy pre-filing counseling and pre-discharge education.
What are the fees associated with the services provided?  The agency should be forthcoming about fees, and no fee should be assessed prior to the service being provided.  Be wary if the agency says their fees are voluntary.  Any set-up fee or monthly fee should be reasonable, usually defined as $50 or less, with monthly fees in the $25 range.  The agency should be willing to waive all fees in cases of true hardship.
What delivery options are available to you for counseling?  Does the agency offer in-person counseling?  Counseling by phone?  Internet counseling?  Is the channel that’s most appealing to you offered?
Is the counselor assigned to you a Certified Consumer Credit Counselor?  You want someone qualified assisting you with your critical financial decisions.  NFCC certification means that the counselor has passed a rigorous battery of tests measuring their financial knowledge.
Does the agency provide educational classes or workshops?  Are any of these tools offered online?  Is there a fee to attend?  The absence of any true education offered to the general public is a red flag.
Will the agency work with all of your creditors?  Some agencies only work with creditors who agree to make a payment to them.  A legitimate agency will take a holistic approach to solving your financial distress.
Is there a minimum amount of debt required to be counseled?  True credit counseling agencies will work with you regardless of how large or how small your debt may be.
What debt relief options are offered?  If the only tool is the Debt Management Plan (DMP), keep shopping.  A DMP is a useful tool, and is often the appropriate resolution.  However, each consumer’s situation is different, thus the solution should be customized to fit their specific needs.  A one-size-fits-all approach signals that you should continue your search.
Are the counselors compensated for writing DMPs?  Any such incentive is not a part of a legitimate agency’s pay to their counselors.
How long will your counseling session last?  Don’t be tempted by “drive-by” counseling.  A counselor simply cannot do an adequate intake of your income, expenses and debts in a short amount of time.  An initial session length of at least one-hour is standard.
If you go on a Debt Management Plan, how soon after receipt of your monthly payment will it be disbursed to creditors?  The success of a DMP depends on timely, consistent payments to creditors.
What happens to your first payment?  Believe it or not, some agencies keep the consumers first payment and consider it a donation.  Be sure to ask about this.
Will the full amount of your payment be disbursed to your creditors?  The full amount should go toward the repayment of your debts, with no portion going into the agency’s pocket.
How will your deposits be protected?  Ask for written evidence that the agency is bonded or insured to protect the consumer from fraud or the agency’s own financial difficulties.
As a final step, check with the Better Business Bureau and your state’s Attorney General to see if there are unresolved complaints about the provider you are considering.  Anyone can file a complaint.  What is relevant is how the agency resolved it.
Legitimate credit counseling agencies counsel and financially educate millions of consumers each year, making financial stability a reality in their lives.  It all starts with selecting the right agency.  Asking the above questions, and receiving the right answers, will ensure that your credit counseling experience is a positive one.
How long should I keep a copy of my Bankruptcy?
You should keep a copy of your bankruptcy, with your tax papers, for at least 7 years. You will need them for any mortgage application but they are now filed electronically and available for download at any bankruptcy attorney’s office if you filed after October 2002. You are only required to keep receipts 3 years by the tax department—after 3 years they have the burden of proof—but keep tax and bankruptcy records for 7 years anyway.
When will I be able to get credit again?
Normally, you will qualify for a home mortgage at normal rates within 2 years if you let your home go back in foreclosure you will qualify in 3 years after the discharge of your bankruptcy. You will be able to get other credit within 6 months to a year. Your ability to get credit is based on your income and your history of repayment, as well as the security you offer. You should be able to purchase a car or house if you reaffirm one or two debts and pay for them on time after your discharge. You always have to be able to afford what you are buying on credit or meet credit standards. You will have to reestablish your credit by paying on time after your filing.
Will my employer and landlord find out about my bankruptcy?
Bankruptcy petitions are public records; however, under normal circumstances, no one will know you filed a bankruptcy petition unless you tell them. Chapter 13 Debtors are often required to make payments through wage garnishment, which means the employer will learn about the bankruptcy.
Will this affect my getting an apartment?
Many of the larger apartment complexes are owned by banks, and banks tend to grant leases according to credit bureau reports. This may affect you. Small landlords will call former landlords and may not check credit reports.
Can employers discriminate or fire me?
Generally no. There is an antidiscrimination section of the Bankruptcy Code that prevents employers or the state from denying you licenses or discriminating against you when hiring. But do yourself a favor: Keep it to yourself. They generally won’t know unless you tell them.
Are there bankruptcy crimes?
Yes. Criminal statutes related to bankruptcy can be found at 18 U.S.C. sections 151 to 157. Examples of bankruptcy crimes are knowingly and fraudulently concealing assets, lying under oath or on bankruptcy schedules, and knowingly and fraudulently filing a false proof of claim. Bankruptcy fraud can also be used to support a RICO claim. Bankruptcy crimes are often the result of claiming you don’t own property that you do own or that has been transferred to conceal it from the Court.
Do I have to disclose all of my assets?
Yes. If you knowingly and fraudulently conceal an asset from the Court, you have committed a felony and you can be fined up to $5000, imprisoned for up to five years, or both. However, this is rare and normally comes up in only the worst cases. In addition, the Court can deny discharge, or dismiss or convert your bankruptcy proceeding.
Can I run up charges on my credit cards just before filing?
The official answer is “No”. Many people do make some minor charges on their charge cards just before filing. Charges of over $1000 on any one card within 90 days before filing are presumed to be fraudulent and non-dischargeable. Luxury items of 500 within 90 and Cash advances of 750 within 70 days are non dischargeable. Charges to an account more than 90 days before filing are presumed proper regardless of the amount. But the rule that you can’t charge within 90 days of filing isn’t written in stone there are 12 factors that the judge will use to determine if it is fraudulent.
There is no reason to pay any further on debts that you are planning to avoid in bankruptcy. Normally, you should file as soon as you can, but it won’t matter if you pay the bills or not before you file. It doesn’t matter if you owed $10,000 or $10,000,000 before you filed or whether or not you paid on time before you file bankruptcy.
Message Edited by Barry on 07-11-2008 12:28 PM