BK and Credit Cards

[haulingthescoreup]

GregB, if you haven't already, you might list the cards you hope to keep over on the BK board and ask if others were able to keep them intact.

In the meantime, concentrating on the biz cards sounds like a good option, as long as they don't get tangled up in the personal stuff. I live in confusion as to when biz cards are and aren't considered part of your personal credit. That might be another question for the Business Credit board.

[Anonymous]

Hi GregB.

Very sorry to hear about the divorce.  It's a terrible circumstance.

However, if you could answer a few questions, maybe you can get more input.

1.  What specific circumstances are forcing BK?  If you can afford the debt now, including home, what part of Divorce will alter that?  Normally in a divorce, the home is often sold to divide equity.  But you stated you want to save it for your son.  Who will retain the home (live in) with primary or physical custody? 

2.  If you plan to retain the home, then are you being required to cash out the equity difference to your spouse?

3.  Nearly every state, if not all states, have some type of homestead exemption as well as other personal property exemptions and exemptions to certain retirment accounts.  It would be the exception to the rule that your home would be in jeopardy for any reason, other than failure/inability to maintain payments, or that you must sell to divide equity.

4.  If you file BK, there will be a means test.  And since you can afford the debt, there will be some type of wage earner plan required (BK13).  You will have a payment plan of at least 3 years, and maximum of 5 years.  The payment will be based upon your income, not debt.  Your payments will be based upon "discretionary" income which means you will be allowed to maintain home payment, auto, basic living expenses.  The remainder of income (discretionary) will be paid toward other debt.  Anything not paid during the payment plan over 3-5 years is discharged at the end of that time.

5.  You are legally prohibited from seeking new credit or incurring new debt during the course of your payment plan, unless you seek and obtain permission from the court trustee (for example: need to buy new auto or other acceptable need).

6.  If you incur or seek new credit, your BK can be dismissed if they become aware of it.

7.  All of your CC's with a balance will be closed and IIB, and paid subject to your payment plan, all remainder discharged at the end, if any.  Some plans are 100% if the income allows.

8.  Those cards with a zero balance will often close the accounts upon notice or realization (your credit reports) that you filed BK.  They understand that you are prohibited from new credit.  They also understand that any credit they extend or allow during the course of your payment plan could be "discharged" by the court. 

9.  Some accounts, occassionally, if they have a zero balance and are not officially included will not close...but these are the exceptions to the rule.

10.  BK is going to really hurt your credit and you will lose most of your accounts, if not all, other than secured loans such as auto and mortgage.

11.  From personal experience of a family member who just recently filed BK13, even Orchard Bank closed their account even though it had no balance and they were not notified as IIB....they found out through credit report and closed automatically.

Good luck and be sure to get with a BK atty right away and discuss your full options!

[GregB]

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@Anonymous wrote:

...However, if you could answer a few questions, maybe you can get more input.

1.  What specific circumstances are forcing BK?  If you can afford the debt now, including home, what part of Divorce will alter that?  Normally in a divorce, the home is often sold to divide equity.  But you stated you want to save it for your son.  Who will retain the home (live in) with primary or physical custody? 

2.  If you plan to retain the home, then are you being required to cash out the equity difference to your spouse?

---

There is a provision in the family code where either attorney or the court appointed CPA can ask that any community asset be sold if they are not paid.

She took most of the community liquid assets and has spent, hidden, or wasted them. She won't respond to doc requests and is expected to ignore an actual subpoena. This makes it tough to actually find the hidden money. Since we haven't got to trial things like her cell phone going from $427 per year to $5193 per year, buying 7 motorcycles in a few months even though she had never ridden one, wasting more than 10 times what she owes her attorney, etc. are not relevant. They come out in trial. The sale of my house is being used as blackmail since the official Marital Balance Sheet shows her owing me money if I keep the house. Additional costs such as real estate commissions, etc. just make her owe me more money. In case it isn't obvious, I'm keeping the house, my son lives with me. Virtually all people in my position would have started using the child as a bargaining chip. I won't do that and it likely wouldn't work anyway since she voluntarily left our son, her son, and her cat.

Bankruptcy might be court ordered to eliminate the debts that I have already run up in order to satisfy the requirement that her attorney get his money. My attorney and the 730 CPA are willing to let me pay them in any way I see fit. There is an offer where I pay all three immediately. That runs up so much more debt, it might force me to BK since I would then owe more than $200,000 on CC. I think my FICO would drop enough that I would lose the 5.99% accounts, BT offers would stop, etc. The other issue with that is that she could still run up more debt with her attorney and they could ask for the sale of the house to pay those bills before trial at which point she owes me money - which I won't get since she has proven she is a criminal.

The problem here is an overloaded and faulty system where the flake has a huge advantage.

[Anonymous]

Are you saying that regardless of circumstance, you are responsible for her unlimited attorney fees?  The code can provide an option of the attorney requesting liquidation for fees, but the attorney must be able to prove they have acted in the best interest of their client and that they have not caused a financial hardship and burden upon you solely for the purpose of extorting consideration.

Have you attempted to seek an injunction against her from spending or "wasting" further assets?  If you file a motion providing compelling evidence, especially that this will harm the well being of the child, you should stand a good chance of an injunction at least until you can have a formal hearing of evidence.

You should not be responsible for unlimited attorney fees.  In fact you can file a grievance with the state bar if they are bilking the estate....meaning that if they purposely run fees in excess of what the potential value of recovery is, this is obviously a violation of ethics and of law.

Anyway, I would look into both the injunction, and the possible grievance.  Most attorneys may not want to advise you on the grievance, since they usually don't like to go after other attorneys....but I have had occassion to file a grievance against the other sides attorney.

[GregB]

No, I am not saying that I am responsible for her attorney fees. The house is still assumed to be community until proven otherwise. In their sick system, it can be ordered sold to pay her attorney, my attorney, and the 730 CPA. It is also assumed that any attorney fees billed are reasonable until proved otherwise, which is done at trial.

I don't think even her attorney thinks further bills are necessary. One of the worst, overly aggresive attorneys in the system wants to be rid of her. It is a problem he created for himself since he attracts this type of client. Sale of the house or even the cost of sale means that even if they prevailed on most issues she would still owe me money. 

He is bound by the ethics of defending her position aggresively unless she says "stop". She just says "I want what is fair". The fact seems to be that requires running up fees in excess of any reward. We are already at the point where she gets nothing more.

[Edited]

Since she was fired due to a criminal conviction she now has no job and "needs" some assistance !!!!!!!. If the court is  not impressed with an arrest for PC273a Felony Intentional Child Cruelty, imagine how little they care about the child losing the only home he has ever known. I have already been stuck between the Family Law judge telling me that I need to provide her visitation and the Judge in Department of Child Protective Services who says he will hold me responsible if anything more happens to my child while in her care and control.

Greg, I edited this message to remove politial references that are prohibited in these forums. For more information, please refere to 5 Things We Don't Talk About . ~Lilmirth

Message Edited by LilMirth on 12-23-2009 06:45 PM