Not out of the woods yet!

[TDP]

My lawyer received a letter today from MBNA. They are considering adversary proceedings objecting to the discharge of a debt. I had used my credit card as a back up funding source and I guess once the bill didn't pass through my checking account, they charged it to my credit card. The transaction was made during the presumption period and they are fighting it. The second part was a late balance transfer that I used to get a lower rate and fend off some higher rate cards. I can show where the money went, but it also fell in the presumption period.

A little heads up would be nice from me friends here at BK.
Worst and Best case scenario??

Thanks, TDP

[StaciMM]

I imagine the worst case scenario is those transactions would not be discharged and you'd have to pay MBNA back.

Best case scenario? The BK court denies their motion.

[HHM]

How much money are we talking about?

Regarding the balance transfer, it won't matter what the money was used for, if that was within the presumption period and its enough money...its a fairly open and shut case for MBNA, they will win that.

Look at it this way, these situations are an opportunity to negotiate. MBNA's attorney does not want to go to a hearing on this. So they will often accept either a reaffirmation agreement or stipulated judgment for monthly payments, (usually not to exceed 12 months) at a reduced amount of the total disputed amount. But since your dealing with a presumption period amount in dispute, do not expect a huge discount of the balance.

[TDP]

The bill was for $926.00. The balance transfer was for $13,100.00. $8000 went to one creditor, $5100 went to another. I used their balance transfer checks to do the transfer. Thanks

[HHM]

Sorry to say, but oh yeah, for that amount, they are going to fight that balance transfer. If the transfer was in the presumption period...there is little you can do.

Obviously, you are going to have to discuss all this with your attorney and get his/her take on it...but I think the best case scenario is to see if they will settle for half ($6,550) and see what kind of payment plan they will accept.

However, if you can't afford to make any payments, and you can't afford to pay your attorney to defend you (usually defending you in an adversary proceeding is beyond the scope of the attorney's representation in BK), then you may just end up with a judgment against (which, incidently, could not be discharged in a future BK).

[StaciMM]

HMM-would the $5100 and $8000 payments to the other credit cards be taken by the trustee and distributed among the creditors equally?

[HHM]

Probably not. The reason being, Credit is not properly an asset in bankruptcy terms. TDP used one credit card to pay off another, that is not a transfer of an "asset" that would have been part of the bankruptcy estate, so in that respect, its not a preferential transfer upon which the trustee can employ his avoiding powers. Think of it this way, the trustee cannot use the available balance on one of the Debtor's credit cards to pay back other creditors, so he cannot undue a payment made to a creditor that was made by borrowing from a different creditor.

The trustee can only avoid preferential transfers of assets. For example, if TDP paid $5000 from his savings account to american express right before filing, the trustee can undue that transaction as a preferential transfer.

TDP biggest worry is the adversary proceeding that MBNA will likely bring if he cannot resolve the issue. The trustee isn't going to care much about this side show as it has nothing to do with him/her.

[TDP]

What type of judgement would it be and how will it effect me? They offered $10450 for a settlement, but if I had that, then I wouldn't have filed bankruptcy. Thanks. Tim

[okane]

Just Curious

How long was it that you did the balance transfer before you filed, 3 months as the presumption period) or was it more time?

[HHM]

What type of judgement would it be and how will it effect me? They offered $10450 for a settlement, but if I had that, then I wouldn't have filed bankruptcy. Thanks. Tim

Its a judgment like any other judgment, but for the fact that it was entered in bankruptcy court as part of a bankruptcy, I do not think it can be discharged in future bankruptcies.

Thus, they can garnish your wages, lien your house etc etc.

Have you considered converting to a chapter 13?

You may be able to dismiss your chapter 7, but you would need consent of the bankruptcy trustee and probably have to sign an agreement saying you will not refile BK in the next 180 days. But then your back to square one having to pay MBNA the full balance along with whatever other creditors you have to deal with.

[StaciMM]

TDP-

From reading your prior posts your acts could easily be considered BK fraud. (You posted in July about using checks on the card to pay your father $8000 and friend $5000 in June because you knew you were going to file BK.) You knew that those transactions were going to be issues-HMM & others here recommended to you in July that you hold off on filing til just before the deadline to help your chances.

The only advice I have is take cover if you see Lightning heading to your thread! Good luck.

[ducksinarow]

Did you pay other creditors or a friend and father? Which is the truth?

If it was a friend and your father from all I've read here I think the trustee can go after them for the money - right?

[ducksinarow]

You said in this thread:

The bill was for $926.00. The balance transfer was for $13,100.00. $8000 went to one creditor, $5100 went to another. I used their balance transfer checks to do the transfer. Thanks

And in this thread http://www.bankruptcyforum.com/showthread.php?t=2468 you said:

I know that we are not suppose to give preferential treatment to creditors, but.. My father had given me about $8000.00 for my business and best friend gave me $5,000.00 to invest. I paid them both back with one account I had. I wrote them checks out of that cc account. That was in June because I knew I would be filing soon. I can't ask them to give it back so I can file bk, I'd rather sell everything I own to pay those bills, what should I do.

???

[TDP]

I'm impressed with all of the Detectives we have here, but this is a little more complicated than the threads read. I once stated it would take a NASA engineer to see all of the balance transfers that have been going on in the past years. I did pay as the post stated, but then used a balance transfer to pay off that account. Paid them in June, balance transfer in July. The latest bank for the balance transfers is the one in question, not the one used for personal debts. The bank for the personal debt was paid back, the new balance transfer bank was not. It kind of saved me from screwing family and friends. Confused yet?? I don't have a problem with paying the debt through judgement or re-affirmation, still better than sticking your family and friends with your debt. I never had any problems paying my dues until monthly payments began to double and interests rates soared. I was only wanting to know how a judgement works and what to expect. I told my attorney I would be willing to do whatever to work out an arrangement, but wanted to hear from my friend's here as well.

[sunshine08]

Boy oh Boy is LIGHTENING going to fry you on this one. I can't beleive he hasn't lit on this one yet, his fingers must be hot and sore from burning up the rest of us.
All I can see is you better listen to your lawyer on this and you may have to convert to 13. Sorry, I can't add something positive, but in your case 13 might be positive.