Legal Question in Bankruptcy in Utah

Re: Credit Card Transfers

Short answer -- my experience tells me you will not have a problem seeking complete relief from these two debts.

Under Section 523(a)(2) creditors can object to relief for certain credit card transactions. The bankruptcy courts generally are lenient in these situations. Basically, if a debt is owed to a creditor for luxury goods or services or credit advances/cash advances and these kinds of transactions occurred within 60 days of the date the bankruptcy is filed, the creditor can challenge the transactions based on the law contained in Section 523(a)(2). However, this section of the Bankruptcy Code only creates a presumption of fraud. Your attorney can present evidence that you had a legitimate reason for the balance transfers (i.e. you were probably trying to consolidate or get a better interest rate so that you could have a fighting chance to pay off your credit card debt).

Also the facts are in your favor. Even if you hired an attorney and filed your bankruptcy tomorrow the transactions in you mentioned occurred well before 60 days. In addition the credit card companies would have to raise an issue of fraud and my experience tells me they would not do it in your situation. Even in the worst case scenario, should a credit card company raise a challenge a good attorney can negotiate your way out of any significant problems. Maybe if there is a challenge you reach a compromise to repay a portion of the debt. However, I feel strongly that based on the 60-day rule you can rest assured that you will not be challenged.

Re: Credit Card Transfers

Generally not, so long as there is no intent to either take advantage of either of the new creditors or to provide special or preferential treatment of the former creditors. The trustee may have an issue, but if the trustee wants to pursue the issue it would be with one of the former credit card companies.

Before you consider bankruptcy, go to a local non profit credit counseling firm, such as Consumer Credit Counseling. They can analyze your financial situation and possible find a way to avoid bankruptcy. Even if they cannot help, they will help you identify some of your financial problems, as well as identifying your creditors.