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Ask Terry L. Your Own Question
Terry L.
Terry L., Attorney
Category: Legal
Satisfied Customers: 2830
Experience:  Better Business Bureau. 18 Years bankruptcy experience. Member of the American Bankruptcy Institute.
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my bankruptcy lawyer never told me I was not to use my credit

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my bankruptcy lawyer never told me I was not to use my credit cards prior to filing bankruptcy. I had moved out of my home and lived with a friend due to mold, separated from my fiance, then had to move back into the house due to issues with my friend. Everything I owned, except my clothes, TV's and some kitchen stuff had to be thrown away or burned due to the mold and my fiance took all of the things he had bought so I had basically nothing when I moved back to the house. The bankruptcy lawyer said I could file chapter 7, foreclosure papers had been issued to me prior to seeing the lawyer and he felt I would be in the house until at least next year, so I replaced some, not all, of the items I had lost. In addition, several large appliances stopped working so I had to replace them as well. He filed the paperwork the end of April, I told him about the credit card usage after receiving paperwork from the law office last week. He said he found it hard to believe noone told me not to use the cards, tried to deflect the blame stating did I remember him saying not to get dental work done until after the discharge of the bankruptcy using a care credit card I had just received in the mail. He never explained why, I thought the court would not look kindly if I started dental work prior to declaring bankruptcy but could not pay my credit cards. I am sick about this, had no idea I could be put on the witness stand and cross examined by my creditors at the meeting of the creditors, was told they never showed up. The paralegal, however, last week told me it happens all the time in case they suspect fraud. I had no intention of defrauding anyone, I honestly thought I could use the cards until my bankruptcy was filed. I did not use all of my credit cards, just 3. I even mentioned to the paralegal several weeks ago when she mentioned to me she would be calling me for the final balance in my checking account that I had used several of my credit cards and that I would give her updated balances. She never said a word to me. I told the lawyer that I do not want to get in trouble, he said you are not in trouble, you will just have to pay back what you spent. I hope this is true, I have not slept well since this happened last Friday. Help, I need advise!

Terry L. :

Hi, thanks for your question. You should hire a lawyer for specific legal advice. No attorney client relationship is created here.

Terry L. :

Ok, So, your chapter 7 is filed. Has any creditor filed an objection?

Terry L. :

The ball is in the creditors court, at this point.

Terry L. :

If they file an objection for the recent usage, called an adversary, you would have to fight the claims that they make in that case.

Terry L. :

The code section that would likely be used: 523

Terry L. :

(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by—
(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition;
(B) use of a statement in writing—
(i) that is materially false;
(ii) respecting the debtor’s or an insider’s financial condition;
(iii) on which the creditor to whom the debtor is liable for such money, property, services, or credit reasonably relied; and
(iv) that the debtor caused to be made or published with intent to deceive; or
(C) for purposes of subparagraph (A) of this paragraph, consumer debts owed to a single creditor and aggregating more than $1,000 for “luxury goods or services” incurred by an individual debtor on or within 60 days before the order for relief under this title, or cash advances aggregating more than $1,000 that are extensions of consumer credit under an open end credit plan obtained by an individual debtor on or within 60 days before the order for relief under this title, are presumed to be nondischargeable; “luxury goods or services” do not include goods or services reasonably acquired for the support or maintenance of the debtor or a dependent of the debtor; an extension of consumer credit under an open end credit plan is to be defined for purposes of this subparagraph as it is defined in the Consumer Credit Protection Act;

Terry L. :

It's letter C that you would have to defend against.

Terry L. :

If the creditors do not object, then they will likely discharge the debts.

Terry L. :

When you meet with the trustee at the 341 meeting, and if they ask you about recent usage, be honest.

Terry L. :

Explain what it was for.

Terry L. :

I wouldn't sweat it until you receive an adversary.

Terry L. :

It is a no-no but without an objection, nothing to worry about yet

Terry L. :

do you have any questions?

Customer:

can I be charged with fraud? I work at a prison, and see the law every day.

Terry L. :

The code section alleges fraud, yes, recent usage just before filing. At worst, you would just have to pay that usage back

Terry L. :

You can negotiate that with the creditor if and when they object.

Customer:

ok, you have made me feel much better! Thanks and have a great day

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