Got Summons from Amex ( COMPLAINTand objection to discharge )

[MajorMike]

Ok, guys, I got the summons in the mail finally from Amex after seeing it on PACER for 3 weeks. We have 3o days to answer as to why we charged on it within 3 months of filing BK. I have to meet with my atty and give him an answer so he can answer the courts. I really dread having to face their attorneys in front of a judge. I'm hoping they just offer a settlement or something. What do you guys think could happen?

[HHM]

What sort of relief are they requesting?

[magyar123]

Was it one major thing that you charged within 3 months before filing, or multiple minor thing?

[MajorMike]

I charged over $5,000 in gift cards thinking I would pay it off with a big commission check I was expecting that didn't come because the sale got "HELD OFF". The sale DID finally come in January but I filed in October. I am liable for it and would pay it no problem but they are saying it should NOT be eligible for discharge due to fraud etc....and are saying I KNEW I was going to file BK and intentionally did not want to pay it which is NOT true.
Now we have to answer the complaint and see if they want to settle or what? I'm not sure.....

[Bandit]

I have a question, did you make any payments back to them from the time you bought the gifts cards to the time you filed?

My hunch is, they may ask you what you did with the gift cards, kind of like sometimes they will ask that about certain gifts like a big TV or expensive jewelry. They might ask, where is the TV or who was it a gift for?

AMX is the type to dig the wound deeper then pour lemon juice and salt into it but your commission pay and the timing sounds more in your favor to me than for them claiming fraud.

I am just wondering how you could settle with one creditor in a ch13? does anyone know if/how that works?

MajorMike, I do not know the answer but am looking at it from different angles with honest questions.

[HHM]

The answer, itself, is no big deal. Answering the adversarial complaint is no different than answering a regular civil complaint. Since you have an attorney, he will (should) go line by line with you and ask whether each statement is true, false, or don't know and he will craft the answer accordingly.

In the big picture, this may or may not be a big deal. If there is any money going to unsecured creditors, (and assuming they file a proof of claim), they will get their requisite percent. If the judge rules in AMEX's favor, the only thing that happens is that if the amount is not paid in full during your chapter 13 plan (and you complete your chapter 13 plan and receive a discharge), you will still owe a balance to AMEX.

[MajorMike]

Thank you Bandit and HHM...but my question is this. Can they still acrue interest, penalties and tack on attorney fees throughout the 5 years I'm in BK??? I did NOT buy those gift cards with the intention of filing whatsoever. I honestly thought that I would be paying them off. This is the type of card you have to pay in full each month. When the commission didnt come, I panicked and realized I couldnt juggle payments anymore. The gift cards, I sold to stay afloat. I DO owe AMEX. I'm not denying that and I know I should pay them. It looks to them like I KNEW I was filing and ran the card up. That is not true. I just held them off thinking the sale would come in and I would be able to pay it off in full. When they look at my BK petition, it looks to them like I had no intention to pay them because my disposable income shows that I can't, but they dont know my paychecks widely vary from paycheck to paycheck...one could be really low and another really big. It's a budgeting thing. I could make 100K one year and 40K the next. It's just how sales is. Anyway, I'm just really worried that they will tack on interest, fees and attorney fees until the 5 years is up and then lay on like 15K on me. I would like to include it in the plan as a secured payment but I dont think the judge will allow that. I'm only at 5% payback right now because our car is in the payments and almost everyone filed claims ;(
Thank you guys, for your advice. You have no idea how much you've all helped me here. I know I have issues..and I've definitely learned my lesson.

[krielly]

Any chance you could handle another $100 mo or so in a 13 payment? The reason I ask, is because if you could, perhaps that would satisfy the trustee in that you could pay off Amex in your plan, without changing your percentage to unsecureds.......
Just a thought.............

[Bandit]

Anyway, I'm just really worried that they will tack on interest, fees and attorney fees until the 5 years is up and then lay on like 15K on me. I would like to include it in the plan as a secured payment but I dont think the judge will allow that. I'm only at 5% payback right now because our car is in the payments and almost everyone filed claims ;( .

If AMX could get away with keeping you down that way then they would, but then going BK sure did not help if they can do that. I would be worried too but not that it will triple in 5 years.

It's a budgeting thing. I could make 100K one year and 40K the next.

I see what you mean now because that particular AMX card was expecting payment in full (some cards are like that)...they look to see if it was possible to pay it back at the end of that month & see that it was impossible.

Your type of employment varies enough in income from month to month & you were depending on a large commission that came later than expected...that is what you will need to show them.

[Bandit]

Any chance you could handle another $100 mo or so in a 13 payment? The reason I ask, is because if you could, perhaps that would satisfy the trustee in that you could pay off Amex in your plan, without changing your percentage to unsecureds.......
Just a thought.............

I was trying to figure out how they can do that. I mean, can you give 100% to one usecured & only 5% to the other unsecured? I wonder if very many trustees ever allow that to happen based on one objection crying foul ball.

At the end of the plan it has to all (whatever %) be payed back, right? & there can't be all this other debt tagging afterward.

[Bandit]

In the big picture, this may or may not be a big deal. If there is any money going to unsecured creditors, (and assuming they file a proof of claim), they will get their requisite percent. If the judge rules in AMEX's favor, the only thing that happens is that if the amount is not paid in full during your chapter 13 plan (and you complete your chapter 13 plan and receive a discharge), you will still owe a balance to AMEX.

They can do that? That would be like waiting five years with chains then having them put more chains on after the time is up.

[krielly]

If it was determined it was not a dischargeable debt, then I would presume it would become a priority debt. Maybe I'm wrong (wouldn't be the 1st time )

[MajorMike]

That is what I need clarification on. I'm waiting for my atty to contact me back. I've left msgs and emails and he wants me to come in this week to go over my answer. That is fine but my wife just had a hysterectomy and she is in a lot of pain. I'm hoping he can do this over the phone unless I have to sign something.
Anyway, yes, I can afford another $100 into the plan if I tell the trustee I'll cut back on something else but it IS preferential treatment. I'm hoping the judge tells AMEX to go to hell but I'd like to know what is the norm...

[HHM]

Unfortunately no, a debt does not become priority by virtue of being non-dischargeable.

Amex is still a general unsecured creditor and would be treated as such in your chapter 13 plan regardless of the outcome of the complaint.

[MajorMike]

But, HHM, would interest and fees accrue the whole 5 years until I can pay them at the end? Would they also make me pay their atty fees? and mine?