15 Aug You Have $80,000 In Credit Card Debt, What Do You Have To Show For It?
At a 341 meeting the trustee may ask, “You have $80,000 in credit card debt, what do you have to show for it.” You may be thinking why is the trustee asking this question? Think of the trustee as a financial detective. The trustee has a duty to investigate your credit card charges.
The trustee generally wants to know when you made the charges and what you purchased. Let’s say you charged 2 televisions, some jewelry, clothing and a computer among other things. However, on Schedule B of your bankruptcy petition none of these items are listed. The result could be a fraud charge because you failed to list all your assets. No matter what you read or hear you must list everything you own and everyone you owe when filing for bankruptcy protection.
The fraud charge arises because you may be seen as hiding assets. Assets, stuff you own, have to be evaluated for the value of those assets. Why? Because if you cannot exempt or protect the value of your assets the trustee in a Chapter 7 Bankruptcy can take your assets and sell them. The proceeds from the sale will be used to pay a portion or all your debt depending on the value of those assets. In a Chapter 13 Bankruptcy the trustee will make you pay the non-exempt value into your Chapter 13 Estate to be distributed to your creditors. Either way the trustee is playing detective to find stuff to obtain money to pay back your creditors.
Another issue the trustees are investigating is your financial history at the time of charging. How much did you charge in the last year? If the answer is you charged $80,000.00 in the last year and you knew you could not pay the debt back then you might be facing an allegation of a bankruptcy fraud crime. Many factors go into this review. When did you make the charges, what did you charge and what was your financial condition was at the time of charging will come into play.
This is definitely not a black and white issue and as creditors lose more money due to the economy the more pressure there is on the trustees to investigate cases for fraud and or assets. You need to speak to a qualified bankruptcy attorney to evaluate your case. The best way to protect yourself when you are filing for bankruptcy protection is to be completely honest with yourself and your attorney. Look at your credit card history. What did you buy? Are those assets listed on your bankruptcy petition? When did you make those charges? Did you make a good faith effort to pay back the debt?
Remember knowledge is power and the more knowledge you have the more power you will have to avoid any possible fraud charges associated with your bankruptcy case. Your attorney can only protect you if you provide all the information regarding your financial situation.
Written by Rachel Lynn Foley, Kansas City Missouri Bankruptcy Attorney.