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New to this forum and Chapter 7-Nervous about chances of an AP

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  • New to this forum and Chapter 7-Nervous about chances of an AP

    I just joined the forum today after meeting with an attorney on Tuesday of this week regarding my bankruptcy options. It looks like we are going to be filing Chapter 7. Frankly scared to death as this is not something I had ever considered doing (but who does I guess?). My biggest concern is the possibility of an AP from a credit card company. I have been basically living off the cards for a while-no major purchases other than a $400 tuition bill. Mostly just $10-$50 purchases. We are going to file the first week of August to put 90 days in between me and my last charges. Here are my charges for the last 90 days
    Capital One-$975
    Capital One Venture-$390
    US Bank Visa-$415
    Credit One-$470
    Chase Visa-$90

    My attorney did not seem overly concerned and didn't even think the 90 days was necessary because the amounts were all relatively low. But for my peace of mind I have decided to give it 90 days. Should I be worried? Is there more I should do? I am going to make another payment on the Capital One and the Merrick-as they have the highest usage. Other than that does anybody have advice for me? Wait longer than 90 days? Going a bit crazy here! Thanks.

  • #2
    Your credit card purchases are lower than what I always think as the minimum for an AP. An AP could cost a creditor $2,000+ just to file and they are not even guaranteed. Living off credit cards is not a "luxury" purchase and proving fraud is difficult.

    I would not worry about any AP in your case. Your attorney is experienced in this area and it is reflected in what s/he told you.
    Last edited by justbroke; 05-12-2017, 02:07 PM.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog

    I am not an attorney. Any advice provided is not legal advice.


    • #3
      Welcome to BKforum!

      I agree with justbroke. Your purchases do not sound like they fall within what would be presumed to be non-dischargeable and a creditor is not going to bother filing an AP for such small amounts.

      My advice is to trust the advice of your attorney and, unless he says otherwise, stop paying unsecured creditors, file your BK and get it over with. But, if waiting 3 months gives you more piece of mind than would being done or close to done with the process by then, there is a lot to be said for piece of mind.
      LadyInTheRed is in the black!
      Filed Chap 13 April 2010. Discharged May 2015.
      $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!


      • #4
        I have a similar situation and my lawyer (who specializes in bankruptcy) is the same with the "meh" attitude. I take comfort in your story and that of others so please keep us updated!!


        • #5
          Thanks everybody for the input. I know I am probably being paranoid but I am just so worried about any problems along the way. I know 90 days does not make me immune to an AP but my hope is that if they look back 6 months and see those numbers, it wont be worth it to the CC companies to file against me. I know they can look back even more than 6 months but I will just have to take my chances on that.

          The information I have been given is that credit card companies usually only file an AP on people who have obvious and egregious problems. For example, filing $4,000 on a card in the month before bankruptcy. Is there a threshold that the charges must meet before they will take action? $1,000? $2,000? Or is it just a luck of the draw sort of thing? Hope I manage to live through this process so I can remember what a good night's sleep feels like.


          • #6
            For credit card companies, and even the junk debt buyers (JDBs), it's all about cost. An AP has a real cost and just to file an AP alone, excluding attorney costs, is $350 just to file! Add at least 2 hours of attorney time at $250-325/hr, and you are minimally at $850-$1000 just to file a complaint. Then, you have to prove actual fraud or that the purchases were for "luxury" goods and that fit within that definition.

            It's just not worth it for the numbers that you list. I charged much higher within weeks of filing (and even accidentally a little on gasoline after filing) without any issues. My charges were all for food and living expenses. I was neither out buying "luxury" goods nor taking cash advances within 75-90 days of filing (which, by the way, are the only two things enumerated in the bankruptcy code specifically).

            (The $850-$1000 to file "bare minimum" is based on a creditor's attorney that needs hardly any time to prepare the complaint. There are also other charges such as service of the summons and other costs that can make this go higher. Then, after filing, the attorney will need to attend a case management/scheduling conference and may even interact with the debtor/debtor's attorney. Keep adding up $250-$325+ an hour and you can see where this goes. It's a huge loss if the creditor does not recover anything -- although their attorney will get paid, the creditor loses. This is why I say that it's at least $2,000-$4,000 to actually prosecute an adversary proceeding (AP) / complaint. Would a creditor risk $4,000 to attempt to get $90? $460? $975? Methinks no.)
            Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
            Status: (Auto) Discharged and Closed! 5/10
            Visit My BKForum Blog: justbroke's Blog

            I am not an attorney. Any advice provided is not legal advice.


            • #7
              Thanks Justbroke. I assumed it was something like that. Although I had no idea the cost of filing an AP was so high for a creditor. I would say my purchases are a mix of luxury and non but we are talking low numbers. If they want to go back farther I guess they can find more luxury purchases but I'm not sure how I could have anticipated BK when I bought something a year ago. My biggest card only has a $2800 limit so I never really had the chance to charge up large numbers like I hear some people talking about. Have never been late on any of the payments either. That will of course be changing in the near future. Just the thought of not making a payment has me tied in knots. I don't know what I would do if an AP actually came down on me.


              • #8
                mmeier, you remind me of me.

                I have been around here picking brains & talking to attorneys for like 8 months now? I know it is hard to get yourself to that place, but really, listen to the experts here -- and your attorney. What seems so huge & scary to us is not so scary to the people who see the process play out, day after day, over and over again. Justbroke & Lady have each been here for almost a decade. Really think about how many they've seen come and go.

                There is what you have to do to make sure you are within the limits of the law ~ and then there is what you have to do to have some sort of mental peace about the whole thing. In my case, I think these were two very different things. Stick around here & read through posts. Use the search function also for whatever is worrying you, as there is a wealth of information "buried" here.

                My gut says you could stop paying now & obviously stop using now. You're trying to do the "right" thing by stopping the charging cycle. That's where I'm at, too.


                • #9
                  I think I am just in information overload right now. Things started to get tight back in January but I was able to hold it together until now. Never dreamed it would get to the point of discussing a BK. I really knew very little about the process before going to an attorney and the issue of the credit cards is the one area that concerned me. I would wait 6 months, if I could, but at that point I would start worrying about judgments and garnishments. This has all happened so suddenly that I am kind of walking around in a daze. All my attorney was concerned about was charges in the previous 90 days, but I read from people on here that the CC companies can look at charges from 6 months, 8 months, even a year ago as fraudulent. I didn't know I was declaring Chapter 7 until last week! I have been working at the same employer for almost 15 years and never dreamed things would get this bad.

                  The attorney told me that I would feel a lot better about things once we talked-that it was the indecision that was keeping me up at night. But now I keep going over credit card statements hoping that the miter saw I purchased from Lowe's back in November wont get me in trouble (just an example). Given that I am not filing until August and wont discharge until at least November, this is going to be a very stressful year for me. I understand that this process at least has an end but right now it feels more stressful than having no money! Here is to 6 more months of sleepless nights!


                  • #10
                    You are overthinking this.

                    I would not worry about creditors looking back more than 90 days because they'd have to prove fraud and that's a very high bar. The code is crystal clear on "luxury good and services" within 90 days and cash advances within 75 days. Anything else, the creditor needs to prove fraud. And while the code does not define "luxury" think of it as buying furs, diamond rings, exotic vacations and other similar tings a person that is insolvent should not purchase. A "luxury" good is not food, gasoline, rent, clothing (unless you're buying Armani and Gucci), home maintenance (painting, repairs, etc), and other life necessities.

                    You will feel much better when you file (everyone says this and it is true). You will feel even better after the 341 Meeting.

                    (A miter saw from Lowe's? I am begging you to put down the credit card statements and stop looking at or worrying about them. No one is going to sue you over a miter saw.)
                    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                    Status: (Auto) Discharged and Closed! 5/10
                    Visit My BKForum Blog: justbroke's Blog

                    I am not an attorney. Any advice provided is not legal advice.


                    • #11
                      ^ yeah, that.

                      Even I have not been going back through credit card statements, and I've been told all of these:

                      "overthinking it"
                      "making it more difficult than it needs to be"
                      "don't worry about the details"

                      etc etc.

                      Seriously. Back away from the credit card statements. For real.


                      • #12
                        LOL, I know I am probably over thinking stuff. I just don't wanna be "that guy" that a creditor makes an example of. My attorney even told me that beyond 90 days there is almost never any action taken by a credit card company unless it is for big money that they are 100% sure they can recover. He had only seen 2 instances of it himself. As the process goes along I am sure things will begin to feel better. Right now it is all such foreign ground that I am no doubt jumping at shadows. Still somewhat in shock that I have found myself in this situation. Logically I know that things will probably work out fine and I will be better on the other side. It is just hard to silence that little voice in my head that keeps saying "what if this happens, what if that happens?". I appreciate all the support and encouragement. I need it!


                        • #13
                          This is a good time and place for me to ask this question I guess. Even if a creditor objects to something and they win their argument, does your entire chapter 7 get completely thrown out? Or are you just stuck with that bill and it cannot be included in the bankruptcy?


                          • #14
                            Originally posted by Chrysalis View Post
                            This is a good time and place for me to ask this question I guess. Even if a creditor objects to something and they win their argument, does your entire chapter 7 get completely thrown out? Or are you just stuck with that bill and it cannot be included in the bankruptcy?
                            There are two types of an objection to discharge. One is an objection to the general discharge of all your debt and the other is an objection to one of your debts. The latter is typically filed by an individual creditor that wants their specific debt to be excluded from your discharge. Typically only the United States Trustee files the former objection to discharge of all y our debts (because there is an abuse of the bankruptcy code or outright fraud).

                            I have read very little caselaw about creditor objections to the entire discharge of all debts. It is typically just for that single debt and it doesn't happen that often.

                            Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                            Status: (Auto) Discharged and Closed! 5/10
                            Visit My BKForum Blog: justbroke's Blog

                            I am not an attorney. Any advice provided is not legal advice.


                            • #15
                              Originally posted by Chrysalis View Post
                              This is a good time and place for me to ask this question I guess. Even if a creditor objects to something and they win their argument, does your entire chapter 7 get completely thrown out? Or are you just stuck with that bill and it cannot be included in the bankruptcy?
                              Glad you asked this question as it had occurred to me as well. Are there any statistics on how common an objection actually is in a consumer bankruptcy and for who files them? I would imagine they are much more common in a corporate bankruptcy where there are a lot of assets and a lot of creditors.


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