I know this person who is disabled and have SSI and a small job to support herself. She has some credit card bills and she mentioned that she is tired of paying so much interest every month. She is considering BK but she is getting some advice from some crooked lawyer who is giving her instructions on getting the most stuff that can be discharged. She already has purchased the following (as far as I know)
48 inch high def TV
Freezer
2 Ceiling fans with remote
2 Tivo TV recording system
New carpets
A new Sat Dish
She also been charging her dinner every night for the last two weeks. She plans to stop paying next month and will declare BK after 4ish months. The whole dischargable estate would be around 32k. This makes me very mad that she is making the honest cardholders pay for her crap. I know I can tip off the IRS of her actions and it can be handled that way, but I just want to find some way to notify someone of what shes doing.
The GQ is…Is there a way to inform her creditors that she is planning on comitting fraud so that it won’t be discharged in BK?
My dad’s an experienced bankruptcy agent, and he says - that’s hard to do. You could write to her creditors directly, but it’d be hard to figure out who they are.
If she does go bankrupt, then (and since you didn’t say otherwise, I’ll assume you’re in the States), you can contact your local US Bankruptcy Court.
What a brilliant idea. Buy a bunch of assets a few months before filing a plan to liquidate your assets.
Don’t have any practical advice for you, just chiming in to encourage you to do what you can to bust the bitch. I work in collections and have lost count of the number of times people have declared bankrupty the month after they run up a thousand dollar phone bill with my company.
She claims that she can justify the TV because she is visually impaired and that they won’t know about the other stuff becasue they can’t get a search warrant. She is also under the impression that what you install in the home is safe because of homestead.
Wow, I’m not even a lawyer but there are so many ways, she and the attorney are culpable. It is wholly illegal to open ANY credit account with the plan of never paying the debt. That is outright fraud. The credit card is basically a cash loan on demand that you agree to pay back before a penny is spent.
Know why creditors can get away with upwards of 27% interest rates, $35 a month if you’re over limit, $25-$40 if you’re so much as a day late on the payment? That’s why. And trust me, I’m no fan of credit cards by any stretch of the imagination. Based on what I know of BK law (though never been through it) there are likely 3 things that will happen.
The lawyer filing loses his bar and most likely serves time.
The friend faces criminal fraud charges.
Though jail time may be a remote possibility upon conviction, anything of value will be repossesed to be auction to recoup losses.
Final note. Watching TV is not a given guarantee. HDTV cuz of limited sight? Nope. That just may give the judge reason to increase the penalty.
Again, IANAL, but since I’ve never needed one for this situation, I have to think I have some of it right.
Technically speaking, bankruptcy protection is not a right. A person asks a judge is they can have it. So it’s possible the judge may look over your friend’s recent spending habits, decide that she planned on defaulting on her payments when she made the purchases, and deny her bankruptcy request. As a practical matter, however, this almost never happens.
One more thing. You mentioned the IRS in your original post. Bankruptcy protection does not cover any debts owed to the IRS. So if your friend thinks she’s going to get out of paying back taxes or fines, she’s facing a real steep learning curve.
I mentioned the IRS because of the fact that is she succeeds, she will have the benefit of getting the items and not paying taxes. There is a number where you can turn in tax cheats but I don’t know if this would be the case. Can I tip off the DA or the IRS or to the BK court without giving my name?
A search warrant? For a bankruptcy? If it’s her lawyer telling her this he’s not only corrupt he’s an imbecile. He apparently does not understand that she will be required to disclose all of her creditors that she wants included in the bankruptcy. If she leaves any out the debt won’t be discharged and the creditor can still come after her. Does she really think Fan World isn’t going to be on her skanky ass for either the money or the return of its property?
The search Warrant Idea was from her sister. She charged the fan to her credit card so I don’t think Fan World is gonna care…lol. He lawyer gave her the time frame to file and what she is able to charge and get before she files. I still am interested to know since BK is public infomation, can I send an affadavitt to the court informing them to dig further.
Once she declares bankruptcy it’ll destroy her credit won’t it? Isn’t that a form of punishment? Nobody’s going to give her credit for a long time. When they do, they’ll charge higher interest rates and basically she’ll be “paying it back” then.
Plus, if she’s carried high balances on her credit cards for a long time, it’s possible she’s already “paid” for her purchases over the years in high interest fees. Well maybe not the HDTV, but the other stuff.
You can’t. You have no legal standing to contest the bankruptcy. Doing what the person is doing is dispicable, it is legal. Depending on the exemptions allowed by the state, the trustee can order the sale or seize certain items. Other than the satellite dish, nothing should raise any red flags. And if satellite TV is considered the norm where she lives, that won’t even be questioned. Items such as the fans and carpeting will not even be mentioned as assets, everything else will fit within most states exemptions and cannot be questioned by the trustee.
And what taxes do you speak of? Sales taxes would be paid at the time of purchase and there is no federal income tax on owning those items. In fact, the IRS couldn’t care less about the bankruptcy. The creditor(s) will have the option of writing the losses off on their own taxes or excusing the debt and supplying the debtor with a 1099 form for the benefit they recieved. Virtually all companies take the write off themselves, it saves them money at tax time.
I have attened about 20 341 sessions in the past couple years (I have a paralegal business on the side) and a case such as this will be small potatoes. There are folks that have 100’s of thousands of dollars of credit card debt wiped away in a few minutes. I saw a young gal who was barely 21 if that have over $500,000 in debt excused, it was all from internet gambling. Yes, the person will have messed up credit for 7 years but with bankruptcy being so prevelant today, it really means nothing. If you have nothing to do for an afternoon, go sit in on a bankruptcy hearing session. They all have websites and list their hearing times. Some bankruptcy clerk’s offices even post the numbers of some the the big money cases. The biggest one I saw was for 27.5 million bucks.
Okay. I just wanted to make sure that she is right and she can get away with everything. I just wish there was something that an average person can do when they see a crime being committed. Thanks for answering my question.
Ironically, BK is one of the easiest ways to re-establish credit, though high ticket items like cars and houses are generally out for a few years.
The line of thought is that after the discharge, you carry no debt and therefore are more likley to be able to pay on one or two low limit cards. Also, you can’t refile for 7 years, so they don’t have that to worry about.
BK is commonly used in legal circles for bankruptcy.
The only reason credit seems easy for the recently bankrupt is because the creditors know that for at least 6 years, they will get paid. And with interest rates well over 20% and very low limits, credit can be expensive. She will never get a job that involves handling cash and her car and health insurance premiums will increase. And when the TV craps out, the carpets are stained and she can’t afford the satellite hook up fees and there is nothing she can do about it, everything will come back and bite her in the ass. The Republicans have been trying to force through some significant changes in the bankruptcy code for a couple of years but they have been stopped for various reasons. There are rumblings such bills will reimerge this year and the Democrats may go for passing the bill because it could make Bush look like a bad guy for picking the poor that are in debt. Bush has even admitted that this may be a bad time for a bill like that but credit card companies are pushing for it and they are heavy contributors to political campaigns.
Well…after the she had the couch delivered…I gave up on trying to talk some sense into her. I do have a question. Since she is on Social Security, she is only allowed to have 2k max in the bank. Won’t the BK court want to know where she has been putting her monthly income? She won’t put a penny into the bills after she declares BK and all she has is her mobile home and rent payment plus bills. Won’t someone care that the other monies are not accounted for? Oh well…
I just does not seem right that a person can keep 2 TV’s with tivo and sat dish and declare BK. But if thats how the system works…thats how it works. Glad I don’t carry any balance on my credit card.
