Need Advice Guys!!

[MajorMike]

Ok, I just got a complaint from American Express saying that their debt of $7800 should NOT be dischargable because I incurred the $4800 of the charges within 90 days of filing. I admit that I do owe that money and if that's the case, then fine, I will pay it, but if they DO prove that this debt is non-dischargable, can they rack up interest the whole 5 years we're in BK and then at the end it'll be crazy like a student loan would be?
Also, am I responsible for paying more attorney fees to my attorney for responding to their complain and acting on my behalf or is this including in my fees that are going to him for the BK?
And is just THEIR amount non-dischargable or am I going to be subject to my entire BK being dismissed because of it?

If they claim fraud, are there other repercusions other then paying them back?

What are the chances they could win this?

Do you think they will make an offer to us to pay them some of it back?

Any help and advice would be appreciated!

[Flamingo]

Have you passed this informaton on to your attorney? Your attorney will handle it - when you retained your attorney at the beginning of your Chapter 13, your fees are for his services during your entire plan. The only time you may incur additional charges is if a Motion has to be filed during your Plan for a Modification or to Buy Out early from your Plan. Otherwise, for your attorney to resolve this situation your initial fee to him should cover it.

[MajorMike]

yes, I have an appt with him on Weds. Do I have to go to court or does he handle it??? Flamingo, there are other questions I asked. Do you know about any of them? Does anyone???
ThankyoU!

[Flamingo]

yes, I have an appt with him on Weds. Do I have to go to court or does he handle it??? Flamingo, there are other questions I asked. Do you know about any of them? Does anyone???
ThankyoU!

He will advise you as to what he will do as to the Complaint. I certainly don't think this will entail having your entire Chapter 13 dismissed and I am certain your attorney must have known what charges were made in that three month period unless you did not disclose those charges to him for that period - if he suspected a problem, he would have not filed your 13. Your attorney will have to review the Complaint and see exactly what they state and he will take it from there. Try to relax - I'm sure your attorney will get it resolved and do his best to get things in your favor.

[MajorMike]

No, he didn't know about the charges because being the idiot that I am, I had no idea about the 90 day thing when I filed the 13. I thought I just had to worry about it if I was filing a 7. He didn't go over every charge on every card before filing.
He makes me nervous because he owes the company I'm employed with over $18k. How can he do his job for us when he has his own debt problems?? I just found this out about his bill with us as I have access to a lot of records.

[Flamingo]

No, he didn't know about the charges because being the idiot that I am, I had no idea about the 90 day thing when I filed the 13. I thought I just had to worry about it if I was filing a 7. He didn't go over every charge on every card before filing.
He makes me nervous because he owes the company I'm employed with over $18k. How can he do his job for us when he has his own debt problems?? I just found this out about his bill with us as I have access to a lot of records.

I am surprised you did not have to list charges made on credit cards prior to filing. We had to list cash advances and purchases for six months (not 3 months) prior on our credit cards and that was in 2002. We all make mistakes and don't think of everything we have to prior to filing but I am really surprised your attorney did not question any cash advances or purchases made with that card during the required time period prior to filing. Any, since he represents you, you will have to go over everything with him at your appointment and hopefully things will turn out for the best. As to your knowledge of his bill with your company, I certainly would not say anything to him about it.

[rrockinggramma]

I could be way off base here but I don't think Am Express can really make the trustee pay more to them than to the other creditors. Since this is a chapter 13 it works differently than a chapter 7, where the 4800 would be held off as non dischargeable. But in a chapter 13, the trustee is paying on your claim so any monies paid to Am Ex would go towards your 4800. I am anxious to have you post what your lawyer says on Monday but chapter 13's are different than 7's and I don't think Am Ex has a leg to stand on since they ARE getting money in your plan.

[Flamingo]

I could be way off base here but I don't think Am Express can really make the trustee pay more to them than to the other creditors. Since this is a chapter 13 it works differently than a chapter 7, where the 4800 would be held off as non dischargeable. But in a chapter 13, the trustee is paying on your claim so any monies paid to Am Ex would go towards your 4800. I am anxious to have you post what your lawyer says on Monday but chapter 13's are different than 7's and I don't think Am Ex has a leg to stand on since they ARE getting money in your plan.

You are probably right but even in a 13 you are questioned as to cash advances and purchases during the months prior to filing all due to fraud, and they also look for large amounts that one may transfer out of a savings or checking account to avoid being an asset in filing. The fraud issues plays in both 13s and 7s. AmEx is hoping to create problems with his filing. Whether or not this will create an issue in the OP's situation will be found out when he sees his attorney this week. To the OP - please keep us informed....best of luck to you!

[rrockinggramma]

I will be waiting to hear from Major Mike to see if I am on base but when we filed, our lawyer told us that creditors really don't have many grounds to object since they are getting paid. Even the fraud issue is diluted since they are receiving monies in the plan. Fraud issues are bigger deal in chapter 7 where the person filing can just walk away. So this will be good to know for those who follow major mike and I bet there will be many more this year . .

[MajorMike]

Thank you Flamingo and Rockinggramma~
I think because the unsecureds are only getting 5%. This is why they are pissed. They would only get about $200. No, my attorney didn't even ask us for our bank statements and neither did the trustee. We got confirmed at the 341 and my attorney never even asked for my charges. I even told him that the week after filing I was due a $6,000 paycheck due to a large commission. He said, that's fine, we won't worry about it...
This is why things are so different from district to district, state to state. Our trustee doesn't ask for tax returns either during the BK...only to file.
Amex has a valid claim, but hopefully my judge will not let them get their way. Shoot, they get enough of people's money. You should see the letter they wrote in the complaint too..
"WE PRAY THE COURT FINDS IN OUR FAVOR AS AMERICAN EXPRESS IS HURT BY THIS LOSS"

Whatever....!! LOL
I'm just worried that I'll have to go to court and I'll be sick if that's the case. Hopefully the judge will rule in my favor and they'll have to take what they can get or write off their losses.

[MajorMike]

I could be way off base here but I don't think Am Express can really make the trustee pay more to them than to the other creditors. Since this is a chapter 13 it works differently than a chapter 7, where the 4800 would be held off as non dischargeable. But in a chapter 13, the trustee is paying on your claim so any monies paid to Am Ex would go towards your 4800. I am anxious to have you post what your lawyer says on Monday but chapter 13's are different than 7's and I don't think Am Ex has a leg to stand on since they ARE getting money in your plan.

He won't. I'd have to keep that amount out of BK for 5 years and pay it when I'm done with the plan.

[rrockinggramma]

first of all, your plan is confirmed and creditors don't really have a say in how much they get paid in a chapter 13. That is one of the "beauties" of a chapter 13. Our first lawyer even told us that creditors have very little say. Course that was all before the law changed. But I would be surprised if Amex gets their way in this case. They are getting money so tough luck for them. But please let us know what the attorney thinks. I bet he laughs at Amex.

[Elf]

By the time that we filed, we were so messed up the we didn't have a lot of credit options, so we hadn't borrowed in over 90 days.

There is a little bit a assumption that if you can still get credit, then things are not quite as bad as you make them out to be. You can always open card "b" to get you out of trouble with card "a."

The fallacy there is that the credit companies have surely behaved in very unethical ways. Why in the world is American Express giving that much credit to someone who is already maxed out? They should be saying "no!"

I personally believe that a certain number of consumers will find a way to pay off CC debt. If that were not true, then we would all be under a BK. I don't believe for one moment that CC companies haven't sat around and determined the ratio of over extened borrrowers that will figure out how to keep paying the interest on their loans, rather than move to a BK.

The law tries to prevent fraud. The question is "Who is frauding, who?" If you DID NOT intend fraud, and you did not commit fraud, then fight it.

If you did commit fraud, then suck it up and don't mess it up for the rest of people trying to honestly get out of the mess that they are in. You should suffer.

Elf

[MajorMike]

I didn't commit fraud, Elf. I didn't know at the time that I was going to file BK. I was waiting on a large commission that never happened, panicked and filed. I didn't have pre-concieved notion that I would run up charges and then file. I'm not ruining ANYTHING for ANYONE!! I would pay back every penny if I could and all I am doing is admitting that I charged it. You did the same thing I'm sure....charged things and now are filing right?
They are saying that what I did was fraudulent because it was within 90 days prior to filing.
The NEW laws say that in a BK 13, a creditor can file a complaint for non-dischargablility. In the old laws, they couldn't....

[rrockinggramma]

of the 4800 charged, was it small stuff or was it big stuff, like luxury items? If you can garner your statements and see exactly what the charges were you can then build your defense. I still think they don't have much of a case because they are getting paid.

Nondischargeable Debt: A debt that cannot be eliminated in bankruptcy. Examples include a home mortgage, debts for alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans or benefit overpayments, debts arising from death or personal injury caused by driving while intoxicated or under the influence of drugs, and debts for restitution or a criminal fine included in a sentence on the debtor's conviction of a crime. Some debts, such as debts for money or property obtained by false pretenses and debts for fraud or defalcation while acting in a fiduciary capacity may be declared nondischargeable only if a creditor timely files and prevails in a nondischargeability action.

Objection to Dischargeability: A trustee's or creditor's objection to the debtor being released from personal liability for certain dischargeable debts. Common reasons include allegations that the debt to be discharged was incurred by false pretenses or that debt arose because of the debtor's fraud while acting as a fiduciary.

I got this from Finlaw. So it looks like Am Ex has to PROVE that you obtained that 4800 under false pretenses. Now if there are no luxury items charged, vacations, RV's, snowmobiles etc but instead charged stuff for living, then I don't think they have a case. And your explanation of a big commission that never came is a valid one.