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cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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Hi. I am very seriously considering filing for chapter 7 bankruptcy

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Hi. I am very seriously considering filing for chapter 7 bankruptcy soon. I'm self-employed (I own several internet businesses) and I have around 100k in personal and business credit card debt. I live with my mom and the house and cars are in her name, so all of my debt is unsecured debt. Although I've never made a late payment, many of my creditors have raised my interest rates to 20-28% and all of this debt is becoming unmanageable. I have 4 questions:

1. Will my business credit cards affect my filing in any way? Although they're business cards, I had to personally guarantee them, so I used my personal ssn when applying.

2. After meeting with an attorney in my area, approximately how long after the initial consultation will it be until I have the meeting of creditors and the entire process is finished?

3. I've read that I'll have to list any assets I have over $1,000. I have several electronic items over that amount, but they're all a couple years old and no longer worth that. Would I still need to list them?

4. I've also read that I'll have to pay back any luxury purchases over $500 that I put on a card in the past 3 months. The only purchases over $500 that I've put on my cards in the last 3 months are my advertising fees for my websites from Google Adwords. Since this was for my business, would these be considered luxury purchases?

Thank you for your time.

Hi JACustomer,

1) The business will still owe the money, but you will no longer be personally responsible for the business credit cards. The fact that you have business credit cards will not make a difference vis-a-vis the Bankruptcy filing.

2) It takes an attorney approximately 2-4 weeks to prepare the papers to file. The trustee meeting is approximately one month after filing. The case is closed approximately 6 months after filing.

3) You have to list all assets worth more than about $100. However, this price is determined by how much those assets could be expected to sell for in a garage or yard sale, or on ebay - not what you paid for the items.

4) Advertising fees are not considered to be luxury items. However, any purchase made without the intention to pay it back is considered to be a "fraudulent" purchase - regardless of the cost, regardless whether it is a luxury item, and regardless of when made - and is not dischargeable.

Edited by cfortunato on 10/3/2010 at 1:56 PM EST
Customer: replied 6 years ago.
Thank you for answering my questions. I have 2 follow-up questions. I have quite a few assets worth more than $100. Will I have to give those away. How would anyone know they're my assets and not my parents since we live in the same house?

At the time that I put those advertising fees on my cards, I did expect to repay them, so do you still think they wouldn't be dischargeable? Right before putting around $500 in advertising fees on each of these cards I sent in $250-$300 to each of them. Would that fact help?

One last thing. Although it looks like I have no choice but to file bankruptcy becuase my business has really gotten slow, so I don't have the money to pay my bills any longer, I'm nervous about filing for bankruptcy and having it denied. I did inflate my income on several of my credit card apps a couple of years ago hoping to get a lower apr. If my bankruptcy is denied, I will have ruined my credit, be out the attorney fees, and will still owe all this money that I don't have.

Would a better option to be to just stop paying my bills? I know my accounts will be sent to collection agencies who then might sue me, but even if they sue me and get a judgement against me to garnish my wages, since I'm self-employed and don't have the money, what can they do? This is definitely not something I want to do, but I can't make the monthly payments, so I don't really see any other way out of this.

Thank you again for your time.

You are allowed to keep any an all personal property if the total value is less than $4,000. (This is in addition to one car, which you can keep if the value (Kelly Blue Book) is less than $2,400.) The only way the Bankruptcy court would have any idea of what you own is if someone (perhaps a personal creditor) knew, and informed the court.

Since advertising fees are not luxury items, there will be no presumption of fraud - as there would be if the charges were for luxury items.

If you stop paying, and do not file a Bankruptcy, the creditors can also garnish bank accounts, and place liens on property. If you have neither, there is nothing they can do to you.

Edited by cfortunato on 10/4/2010 at 12:00 AM EST
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Customer: replied 6 years ago.
Thanks, XXXXX XXXXX has really helped.
You're welcome! And thank you for accepting my answer!