I'm filing BK but need to make some urgent repairs on credit.

Question

I plan to file a chapter 13 debt reorganization in about 6 months. Then, my air conditioner broke and will cost thousands to replace (note: I have to have it - it's 104 degrees in Texas). My bathroom carpet has molded and will need replaced (nothing fancy - just cheap tile). I have the credit available to do these things, but what is the fraud implication of making 2 very large purchases and then filing 6 months later? I don't want to intentionally commit fraud, but I'm stuck between a rock and hard place.

Answer 1

The following debts will not be discharged

    *  Taxes, where returns either were not filed or were fraudulent

    * Debts left off the bankruptcy schedules

    * Support obligations

    * Student loans

    * Debts for personal injuries caused by drunk driving

    * Criminal fines

    * Some restitution orders

    * Debts for money obtained under false pretenses

    * Debts for luxury goods bought on credit within 90 days of filing

    * Cash advances over $750 obtained within 70 days of filing

    * Funds obtained by embezzlement

(find law.com)

I would suggest however, that you discuss with someone if you could try to repay your debts.

There are many problems that will occur when you file chapter 13

Chapter 7 Bankruptcy, which is total bankruptcy, stays on your credit report for 10 years. Chapter 13 Bankruptcy, more like a payment plan, stays on your credit report for 7 years. Bankruptcy, however, is for life. Loan applications and many job applications ask if you have ever filed for bankruptcy. Ever. If you lie to get a loan because your bankruptcy is very old, technically you have committed criminal fraud. (daveramsey.com)

It will also be very hard to get a mortgage after filing chapter 13...

FHA will insure mortgages to individuals who have filed Chapter 7 liquidation bankruptcy two years after the discharge if "the borrower has re-established good credit (or has chosen not to incur new credit obligations), and has demonstrated an ability to manage financial affairs."

To obtain a loan within one year after the discharge, the borrower must show that "the bankruptcy was caused by extenuating circumstances beyond his or her control and has since exhibited an ability to manage financial affairs and the borrower's current situation is such that the events leading to the bankruptcy are not likely to recur." (Mcdonald law)

It is best that you try to repay your loans and credit in a responsible manner before attempting to file bankruptcy. By learning how to budget and repaying your debt to the best of your ability, you can avoid bankruptcy. If you bought the items and made a promise to repay, you should honor that promise and try to repay.

You can find help through some of dave ramsey's certified financial planners at daveramsey.com or i could help you via email (I am an accountant) at [e-mail] or the link that is in my answers profile.

Answer 2

Your fine these would not be considered fraud since they are required repairs for your home.

Fraud would be if you went out and made a large cash advance on a credit card and then filed.

Additional information.

I don't get it the lady asked for advice not a lecture, if you can't say something positive don't say anything at all.

Answer 3

So you're already in financial trouble, but you're going to charge more stuff and file bankruptcy?

Have you tried consumer credit counseling? Have you thought about getting a 2nd job? Or maybe you could sell your house and let the new owners worry about the repairs. Then you could pay your bills.

Bankruptcy should be an absolute last resort.

You can get advice on budgeting, paying down debt, and living below your means. This is the best forum I've found: http://boards.fool.com