Announcement

Collapse

Forum Rules (Everyone Must Read!!!) (updated: 04/28/2015)

Welcome to the Bankruptcy Forum. Bankruptcy (BK) Forum is known as BKForum.com and will be referred to as BKF hereinafter. In order to ensure a long term success of our vibrant community, we have established certain rules and guidelines to which everyone must adhere to. Please take your time to carefully read our rules, before you start to participate in the community.

Things you agree to do:
BKFORUM.com (BKF) users agree to use the search function before starting a new thread. This prevents duplicate discussions and allows for better organized topics.

All BKF users agree to read the sticky posts which may be available at the top of a forum page. These Sticky posts often contain valuable information. They may also outline more rules and guidelines specific for that particular forum, stickies are put in place by that forums moderator(s) or admin(s).

Things you agree not to do:

All BKF users agree not to call people names or write a post simply to make a personal attack, or get a negative reaction; this behavior is not allowed on our forum. The use of derogatory language aimed at anyone will be severely dealt with. There is no need to agree with each other, or to even like each other. However, by signing onto BKForum.com you agree to treat each member and guest with the respect they deserve. No threats or personal attacks will be allowed.

All BKF users agree not to discuss, engage, or encourage any behavior or activity which violates the law. Discussion of drugs, violence, murder, theft, vandalism, fraud or any other issue which could be used to help individuals break the law is strictly forbidden.

All BKF users agree not to "bump" old threads, unless there is a specific benefit to the community by doing so. But in most cases, please don't post in very old threads, instead start new threads.

All BKF users agree not to attempt/use another members account. It is against BKF rules to use any account other than your own. Impersonating another member will result in an immediate ban. It is also against the rules to open more than one account in your own name without permission from a moderator or administrator. If you have been banned for any reason, it is against the rules to open another account. If you were banned temporarily and you are caught using another account you will be banned permanently. Choosing a moniker which is similar in either sound or spelling as a moderator or administrator is strictly forbidden.

All BKF users agree not to private message any moderator, admin, or other member with questions related to their personal circumstances (Questions about the forum or issues with the forum are ok). This forum only works when members share their experience and insights with everyone.

Things you agree not to post:
All BKF users agree not to post any derogatory/racist/or sexist remarks. This includes attachments, links and all information contained within posts, signatures, and avatars, failure to comply with this rule will result in a permanent ban.

All BKF users agree not to post any copyrighted or trademarked information without the express written permission of the owner(s) / proper citation of source.

All BKF users agree not to post any real names, addresses, telephone numbers, email addresses, social security numbers, or any other personal details (their own or other people's).

All BKF users agree not to post links, pictures, attachments, videos, or the like of pornographic content, objectionable material or extreme violence, whether cartoon or real.

All BKF users agree not to use BKF for advertising purposes without a written contract between yourself/company/agent and the administration of BKF. Blatant advertising will result in a ban.

All BKF users agree not to spam the forums. Spam includes but is not limited to posting erroneous, non-relevant-useless, off-topic, or meaningless posts. Spam may also include posts which contain no text, or large areas of blank space between lines. Simply posting emoticons without text is considered spam. BKF is the largest bankruptcy message board and all the content is intended to help other users. Please help us improve the quality of our forum by making sure that your posts are well-worded, spell checked, grammatically correct and syntaxed.

Regarding actions of moderators and administrators:

The forum is no place to air out your opinion or be judgmental of our staff and its capabilities.

All BKF users agree not to abuse or mistreat moderators or administrators. It is against BKF rules to post any information regarding bans or any other action taken by a member of the moderating or administrative team. If you wish to discuss bans or warnings please do so via PM. To place a complaint against a moderator, send a PM to a super moderator. All Moderators are equal, any decision made by a moderator must be adhered to. If a moderator tells you something you do not like, do not go to another moderator looking for a different answer. If you are caught doing this you will be banned. The moderators work as a team and respect the decisions made by their peers and will help enforce them unless an administrator tells them differently.
If you have an issue with how the forum is run, then notify one of our administrator and we will look into the situation. We have in the past and still do appreciate any input that you offer this forum. But critical input and/or judgmental postings towards the staff will result in you getting banned.


Should you find a thread offensive or out of line, then notify a Mod in a PM so they can evaluate the situation and do the action deemed necessary.

All moderators do have active "other" lives outside of the forum and help moderate this forum in their spare time throughout the days and weeks.

If you have a problem with a member or Mod follow the proper channels of reporting it.

BKF reserves the right to delete any posts which contain anti-BKF comments or discussion. Any bashing of moderators or administrators, or any of their discussion or actions will also be deleted, and the responsible posting party(s) will be banned. Any public anti-BKF advertising, communication, or posts on another forum will result in permanent bans as well.

All warnings and bans are decided by individual moderators and administrators. Warnings are preferable to bans however, for serious offenses and repeat abusers bans will go into effect. The length of the bans can vary from several hours to permanent.

All messages posted or sent including through PM are the property of BKforum.com.

All BKF users agree not to advertiser on the forum (Niether by posting, private messaging or using your signature). If you are a company/attorney/legal adviser wishing to advertise on the site or sell a product, you must contact the head administrator and inquire about our advertising packages.

All bankruptcy related opinions expressed on BKForum.com are those of their authors and not necessarily of BKF, its staff or representatives.

You agree not to copy any material/post/content from BKF without written permission from our head administrator .

By posting on this forum you agree to these terms and conditions, including any punishment deemed appropriate by moderators or administrators in the event of an offense.

Administrators/Moderators can change these rules at any time without prior notice.
See more
See less

I need your help: AP Threat

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

  • I need your help: AP Threat

    Hello everyone. Thanks in advance for reading this post.

    My wife and I have been drowning in credit card and student loan debt for years. Around early April, we filed Ch. 7 BK. A week or so after our 341 meeting, our attorney's paralegal emails us asking about a transaction from November. She attached a letter from the lawyer representing MBNA (BOFA). They are threatening AP. Let me explain the situation:

    For years, we have been trying to "do the right thing". We had been doing the Dave Ramsey thing and cut all of our cars up. In November, we got balance transfer checks from BOFA. Our limit was $30,000. We had about $50,000 in CC debt at the time. We thought it would be great to pay the 3% fee to get 0% for 13 months. The rep asked if I wanted to pay the cards off directly, or get the money in my account. Since I no longer had the cards and didn't know the numbers, I opted to get the deposit directly into my account. As soon as I received the money, I went onto those websites and paid off 3 (or 4) cards, as evidenced by my bank statements.

    For the next few months, I made payments on the card. After a few months, I called and told them I think I may have a few issues with payments coming up, and I wanted to be pro-active (my wife and I were expecting-baby came in early March). But they were not hearing any of it. So I just stopped paying, and using money in areas in which I felt took first priority.

    I then thought about BK again, but quickly brushed it off. Then one day, I was reading that many people who file, their only regret is that they didn't file sooner. So, we went ahead and did it.

    Now this. There is ZERO way that this was fraud or abuse. Absolutely no way they can prove it (plus it was not within the 70/90 days). Some people are saying my attorney dropped the ball. When I first met with him, he asked if there have been any BTs recently, I said yes. But that was it. He never asked anything else about it. Hindsight, I should have waited a few more months.

    If I was trying to commit fraud, I could have done what some people have done: use CC to pay off cars/student loans/degrees, etc. But that was not on my mind. I was simply trying to lower my interest rate to get out of debt faster. And as my bank statement shows, the money I received immediately went to pay off other unsecured debt.

    In their letter, they mention "misuse". This is ridiculous. But my attorney immediately signed an $8000 offer they made. I am not signing. I think I can pay his $2000 fee, win, and get my $2000 back from them. Again, I had NO CLUE we would file when I got this BT. Plus, I did not enjoy any of it for personal use.

    What do you all think? Sorry for the book.

  • #2
    You might be facing a tough fight. Balance transfers are not in the same category as new purchases so the 70/90 presumption of abuse rule doesn't afford as much protection as one would hope. They don't necessarily have to prove fraud; demonstrating your actions caused them financial damage might be enough.

    Based on the detail you provided, it appears that you were just shy of 6 months in between your balance transfer some time in November and your BK filing in early April. Did I read that correctly?

    You made a few payments, which is good. Unfortunately, the amount of the transfer and the short period of elapsed time might work against you, even if you did make some payments. Showing that you used this money to pay off other cards isn't going to help much. It might even look like preferential payments to some creditors at the expense of another creditor in the eyes of a judge.

    This might be harder to win than you think. Your legal fees could really add up. Worst case, you might be on the hook for more than the $8k settlement if you lose the battle. I don't envy the decision you have to make. It's a tough position to be in. I wish you the best of luck.
    OK - from now on it's not a "Bankruptcy." It's a "Weight Loss Program." I'm in. Sign me up.

    Comment


    • #3
      Thanks for your reply.

      Yes, I was about a month shy of the 6-month window, a window I had no idea existed, and that my lawyer never mentioned.

      It is weird about preferential payments, because why would I pay off creditors then file BK? If I planned to file, then of course I would have never paid off these creditors.

      This is hard. Should I just wait it out and see what they do? Do they have a ROCK SOLID case?

      Comment


      • #4
        If it were me, I would not sign. If they want to file a 523 objection, let them do that first. A lot of creditors play this game and it goes no further.

        There's a clear crumb trail leading from your account into the pockets of the other creditors. Balance transfer only superficially disguised as a cash advance. If any of that took place inside the preference window, not your problem. The trustee can force everyone to empty their pockets and dump it in the common pot and then stand in line for their share. It won't impact you or your discharge.

        If it were me, I'd be playing chicken. Even if they file an AP, I think you can win. So long as your attorney is up for the task. Maybe refer him to Des for some spring-training.
        There are two secrets for success in life:
        1.) Never tell everything you know.

        Comment


        • #5
          Thanks debee. That is rreally encouraging. I just can't wait for this to be over. I really wish I would have never did the BT, but of course, I didn't know at the time. Also, I wish I would have waited to file. But I didn't know at the time. If I spent that $29k on goods and services, then of course I would be elated to accept $8000. But I was just trying to get out of debt. I honestly was trying to do the "right" thing.

          I'm not going to sign. I can't afford $200 a month for 40 months. Not even close.

          Comment


          • #6
            If they do file the objection, and I want to settle, will their $8000 offer go up, down, or stay the same? Once they do file (if they do), who has more bargaining power, me or them?

            In my heart, I feel I have a strong case. But then again, I don't know much about BK law.

            Comment


            • #7
              Personally, I don't think it's a "rock solid" case. But it's not exactly weak, either. If I was standing in your shoes, I would probably wait it out, as you say, just to see if they put any more cards on the table. It's hard to tell if they will really pursue this. It might not be worth it to them. They've made a first gesture, that's all. But if they DO stand behind it and if you DO choose to fight it, plan on it being a challenging fight. Luckily you'll get a lot of wisdom and insight from the forum... people who have been through similar experiences and people who have solid legal backgrounds. It's kind of late and it's a holiday weekend so the feedback might be a bit slower-in-coming than normal, but it will come. Hang in there.
              OK - from now on it's not a "Bankruptcy." It's a "Weight Loss Program." I'm in. Sign me up.

              Comment


              • #8
                Most (if not all) courts have concluded that balance transfers are not fraudulent.

                It's very common for people in the months before bankruptcy to transfer high interest balances onto 0% cards. What you did was move the debt around. It's not as if you took a big cash advance and went to Fiji, came home and filed. You didn't. You saw a lifeline in the 0% offer, you grabbed onto it (like a million others before you) and after hanging there for a few months you realized it was too little, too late.

                In fact there are cases where the balance transfer was done in the 90 days before debtor filed and the trustee was able to recover the money (as a preference) and then take his share and redistribute the rest equally between all the other creditors. No impact on the debtor whatsoever. No fraud, no problem, no 523.

                ETA: If they were to file an AP (remember these 523 threats are common), you will have more power because that is when you get to tell your side to the judge. Once it comes out that you used the money to pay off other dischargeable credit card balances, it will be clear that it's not fraud.
                Last edited by debee; 05-28-2011, 03:54 AM.
                There are two secrets for success in life:
                1.) Never tell everything you know.

                Comment


                • #9
                  i would speak with your atty once again about this.

                  fraudulent transfer or preferential transfer by the debtor prior to the filing could really only be their argument, and the creditor, still should have to be included with that "90"day period prior to your filing. also, i don't know exactly how they would consider it fraud, most difficult to actually prove. if you will this ap....the creditor must pay the legal fees and i think you have a shot at it based on the information you provided. best of luck!
                  8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

                  Comment


                  • #10
                    GS

                    In your PM, you asked me to comment. I felt replying to the thread would be more helpful in the context of the other responses.

                    This issue is not so open and shut. If B of A files a 523 action it will be under 523(a)(2)(A) - use of the credit card based upon a false pretense, false representation or actual fraud. The timing of the use of the card is not relevant and there is no such thing as a "6 month" waiting period. While it is true that the more time you put between the use of the card and the filing of bk may help in getting a creditor to "look the other way", there is no “outside time period” rule as it relates to a creditor’s right to file a 523(a)(2)(A) matter.

                    Under Grogen v Garner, 498 U.S. 279 (1991), for there to be a 523(a)(2)(A) claim, the creditor must show:

                    1. A false representation;
                    2. That the debtor knew the representation was false;
                    3. That the debtor intended to deceive by making the false representation;
                    4. That the creditor relied upon the false representation and;
                    5. That the reliance was justified.

                    The Circuits have interpreted this differently. I tried to research your Circuit but my wonderful State Bar's web site is not working - go figure - so I do not have access to the Fast Case research portal.

                    Some Circuits (minority) hold that by simply using the credit card, the user makes a representation that they have the ability to repay the amount taken and that the creditor has justification to rely on such a representation. Other Circuits (majority) do not. Why the card was used (balance transfer) is not relevant as such is not one of the 5 enumerated elements of proving a 523(a)(2)(A) claim. The determination of whether or not there was a false representation at the time the card was used is a question of fact and will be borne out in discovery. The problem is that defending such an action is costly. Can you do it yourself, yes. Should you, no.

                    If this was a case I was handling:

                    1. I would advise my client to do nothing until a timely 523 complaint is filed. We would not even respond to “the letter”. “Creditor, if you think you have a claim, file the complaint. Otherwise, go away.”
                    2. If a complaint is filed and we were dealing with $30k my client would have to decide if settling would be more cost effective. Typically my firm’s fees run between $10k and $15k (depending upon how much discovery is done) to defend to trial a 523(a)(2)(A) claim. If we win, great. If we lose, the chances are my client will also be responsible for the creditor's fees which may be more than ours. Due to the risk, we would probably try to settle. This is what the creditor is counting on because the creditor knows the risks as well. So, unless the creditor was trying to make "an example" out of you (this does happen), you should be able to settle for something less than the full $30k. Will it be the current offer of $8K? Probably not but if they fail to file the complaint then waiting saved you $$. Tough call.

                    I hope this helps.

                    Des.

                    Comment


                    • #11
                      Des, your post was VERY informative. I appreciate it!!!

                      My lawyer charges $2000 for AP defense, with $1000 being up front. Does this help?

                      Comment


                      • #12
                        Originally posted by GoodSon View Post
                        My lawyer charges $2000 for AP defense, with $1000 being up front. Does this help?
                        If this is what he charges for the entire defense of an AP (plus costs like copies of depositions) then maybe you proceed with defending. It is still a tough call since, if you lose, you may have to pay the creditor's legal fees which, I can assure you, will not be capped at $2,000.00.

                        Des.

                        Comment


                        • #13
                          Your whole case hinges on whether or not the creditor can prove that you made a knowingly false representation when you used the card. The onus is upon the creditor to prove that you used the card and you did not intend to repay the debt. How are they going to do that? (keep this question in mind)

                          When looking at your case, the court will be using the standard of "common law fraud". The court will consider all the facts and foremost among them is the fact that you used the money to pay down pre-existing dischargeable debt and did not acquire any new benefit (other than a lower payment). This goes in your favor. They will look at the timing between card use and filing; whether an attorney was consulted before card use; the number of charges; their amount; your financial condition at card use; whether you went over limit; whether multiple charges were made on the same day: whether you had a job; your financial sophistication; and whether you purchased luxuries or necessities.

                          They will consider all the other facts and circumstances in your case to determine whether you knowingly gave false representation of your intent to repay when you used the card.

                          The creditor must convince the court with evidence that you acted in bad faith, knowingly using the card with no intent to repay. This is not an easy thing to prove.

                          You rolled high interest debt over onto a 0% card, made payments for a few months until discovering you were pregnant and then changed your financial plans at that point. The fact that you paid until then is proof of your intent to pay. The baby is your saving grace because it is a trigger event akin to sudden job loss or illness.

                          If they file an AP, I see you prevailing.
                          Last edited by debee; 05-29-2011, 01:06 AM. Reason: Oh, you know, the usual. Trying to get the words to come out right. :)
                          There are two secrets for success in life:
                          1.) Never tell everything you know.

                          Comment


                          • #14
                            OK, so a hearing has been set for November 7. Does anyone have any idea what will happen here???

                            TIA

                            Comment


                            • #15
                              What kind of a hearing was set?
                              ~~ Filed Over Median Income Chapter 7: 12/17/2010 ~~ 341 Held: 1/12/2011 ~~ Discharged: 03/16/2011 ~~
                              Not an attorney - just an opinionated woman.

                              Comment

                              Unconfigured Ad Widget

                              Collapse
                              Working...
                              X