@zennuts said in Stated Income, Credit Cards, Bankruptcy - Likelihood of fraud accusations?:

I would find more about the current law. I believe it changed quite a bit since Keebler’s day so it may no longer be doing what you are hoping it would and also, may not be your best option.

I would also add it’s very very unlikely that you will be criminally charged.

The most notable Bankruptcy reform occurred in 2005 (BAPCA) and mine was a few years AFTER that so the new rules already applied. I haven’t heard of any newsworthy change since then.

In fact, I remember seeing graphs showing the number of bankruptcies spike before the law changed and then slowly rise back of from nearly nothing right after the law changed. The number of Bankruptcies before-and-after were virtually unchanged!

Back then I participated in a Bankruptcy forum and learned tons about the Bankruptcy process before I did it. There’s ways to do it wrong and there’s ways to do it right.

Contrary to popular belief, Bankruptcy isn’t for avoiding financial disaster – its for cleaning up after financial disaster.

The best advice that I got was to start living your post-Bankruptcy life before you file for Bankruptcy. In this regard, you reform your finances first and learn to live within your means. Then you use Bankruptcy to avoid having creditors interfere with the recovery that you’ve already put in to motion.

Very generally, you stop paying anyone who’s going to be discharged in the Bankruptcy and you start living paycheck to paycheck. Spend every penny and stop ignoring all the important stuff. Maintain your house and your car. Spend money on your health instead of ignoring it. Get your teeth taken care of. Buy clothing. Spend every penny of your paycheck on reasonable living expenses and don’t leave anything out. Your goal is to demonstrate – by example – that you’re spending every penny of your paycheck on all the reasonable living expenses that normal people have. Don’t skimp out on anything. Keep good records and do it for at least six months (longer if you can).

The Bankruptcy filing will rely on your six months (or more) of history to demonstrate that your living expenses actually consume 100% of your income and therefore you have no money left to repay creditors. This is Chapter 7.

If you manage to have money left to repay creditors, you’ll end up Chapter 13 and you’ll spend the next three to five years repaying what you’ve demonstrated is available.

Far too many people go in to Bankruptcy having skimped and scraped to get by. They neglect healthcare and car maintenance and they live on Ramen noodles. Well, guess what? You’ve demonstrated that you can live on almost nothing and the court will happily put you in to Chapter 13 where you’ll be living on Ramen noodles and skipping car repairs and dental care for FIVE YEARS wile you struggle to repay creditors.

Instead, you should learn what the court thinks are reasonable expenses and live your life fully within those guidelines while you save receipts and establish your pattern. Even if you end up in Chapter 13, you’ll know it well ahead of time because you’ve gotten yourself on a sustainable budget. The best part is that it’ll give yourself the best chance of surviving long-term.

If you can prove that there’s no money left at the end of the month to repay creditors, you’ll be Chapter 7 and you’ll start your new life debt-free and penniless.