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Is this true?


markolas
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A bankruptcy attorney told me that recent changes in Chapter 7 bankruptcy laws expanded the definition of "fraud" to include the idea that if you ran up a lot of credit card debt and knew or should've known that you wouldn't be able to pay it off, that would constitute fraud, and your debt would not be discharged under Chapter 7.

I know that Congress was in the process of passing "bankruptcy reform" legislation, but I haven't heard whether or not this has succeeded yet or not.

Has anyone heard of this?

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Bk reform has not passed. If nothing is done by the end of the year, the legislation will die and if the new Congress is interested in bk reform, they'll have to start all over.

Fraud isn't the corect term. The catchall "substantial abuse" would be the grounds for dismissal and a trustee can do that under the present laws. A lot will depend on how you used the cards in the months prior to bk.

Poat some details of your concerns. Total debt, income, assets,etc.

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I had both accounts closed before they were even charged off, so the cards haven't been used in well over a year.

I had two cards with Bank of America with limits of $7500 each. At the time I opened the accounts, I was making $7.50 an hour at an electronics store, so I have no clue why they'd give me a credit limit that high, unless they either didn't care, or they wanted me to run up huge debts.

Currently, one account has a balance of about $10,500 and the other is about $9500. I also have about $6000 in student loans, and I owe about $9000 on a car loan, but I'm current on all those payments. I'm now making $11.50 an hour.

I don't have the money to settle with the CA, and I was making small payments to them (my balances continued to increase, however), but I can no longer afford it, and the balances were going up instead of down, so I've stopped. I'm concerned that they might sue me, but I don't have anything they could take (no house, no savings, and I'm still making payments on the car), and I live in Texas, so they can't garnish my wages. I'm worried that they'll be able to take hold of my checking account, though.

I worry that I wouldn't be able to complete a Chapter 13, which is what the attorney I spoke to was pushing. What if I lost my job and couldn't make payments to the trustee? I might be in worse shape than I was before...

I'd much rather do a Chapter 7, but the attorney scared me. I'm smart enough to be suspicious, though. I know he gets more money if I do a Chapter 13, so that made me question his motives and advice.

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Oh, I forgot to mention...

The reason the attorney brought up the "fraud" issue is because I wasn't making enough at my job to make ends meet, so I started taking cash advances on the cards. A few months later, I lost my job and the cards were the only things I had to live on. So that meant more cash advances. They were both maxed out in less than a year.

Stupid, stupid me. I know.

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Well, it's one thing to use a cash advance for a trip to Europe and another thing to use them for the necessities of life.

Were I you, I'd go see another lawyer or two. You're far from the first person who ever ran up cc's while on a low income or used the cards for living expenses while unempoyed or under employed. I don't see substantial abuse in your situation.

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I think I'll do just that.

What would be the worst thing that would happen if I did file Chapter 7 and it was contested in some way? Would the creditor be the one to contest and sue me (and could I go to jail)? Would the judge or trustee just insist on a Chapter 13 instead?

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