Should we respond to this letter from Chase?

[WC Nurse]

Our attorney forwarded a letter they received from Chase regarding a CC that I had. It states that the debtor's account statements and court documents reveal that Chase may have a non-dischargeable claim. It then outlines all the charges between 11/18/08 and 1/23/09 which totaled 9k.

It states that "Chase is considering filing a Complaint to Determine Dischargeability of Debt with regard to this account. However, before making a decision whether to move forward with litigation, it would be helpful if your client could provide me with more information about the reason for the charges, what was purchased and her financial condition at the time the charges were made. I note that the account was opened in 2006 as a Business Account. However, your client does not list any businesses on her Statement of Financial Affairs. As you know the bar date for filing a Complaint is 7/6/09. Therefore, I ask that you contact me by 6/5/09. If I do not hear from you by this date, I will contact my client to discuss potential courses of action."

My attorney says while they may proceed with a lawsuit, it's not typical. My attorney has offered to help me settle the debt for $250 up front and 10% of the amount they are able to reduce the settlement by. Should I take them up on that or should I just wait to see if Chase proceeds? Should I respond to Chase at all as far as them wanting to know about the reason for the charges? About $4k was the animal hospital because my dog had a seizure and got very sick, $3k was because my daughter had a car accident, $1k was my son's college tuition and then there were miscellaneous charges. Any suggestions? Any experience with Chase in these matters?

[jadams]

Those charges are high, so I guess I can see why something in their system triggered the letter -- but I wouldn't agree to paying anything. I think it's fishing expedition to see if you bite.

Your lawyer would be more familiar with the finer points of your district, but in general they have a *very* large burden of proof to have the debts determined non dischargeable.

The easiest I see would be making a stink about the tuition. There have been some cases that determined tuition charged to a CC should be treated like a student loan, but there have been cases ruling the other way.

If I'm not mistaken they would have to prove you were or should have known your were insolvent at the time of the charges, plus they would need to show *intent* to defraud. They're beyond the automatic "presumption of insolvency".

It would be expensive and time consuming to follow through. Just sending a letter about intent to complain is cheap and quick.

[albacore44]

I know hindsight is 20/20, but you probably should have waited to file and let those charges age a bit. in the big picture it's small potatoes, but they do have a point in that you filed pretty close to when those charges were made. Keep us posted as to your decision and how they proceede.

[catleg]

No doubt your attorney's willingness to take 10% of the "settlement" reflects the low probability of them collecting anything on this debt. He can settle with them for 50%, take 5% for himself, everybody's happy.

Remember if they start an AP, and lose, they can be liable for your legal fees.

It's pretty funny that they're asking what the charges were for. Like they don't know already?

And the nonsense about the business account. And you didn't list a business. And this happened in 2006. And they're asking about it NOW?

Tell them to pound salt.

P.S. There is a concept called "badges of fraud". Just because some "badges of fraud" exist does not make it a fraudulent transaction. They're trying to imply that badges of fraud exist. There has to be a preponderance of evidence to swing it over to their side.

P.P.S. My experience with collection attorneys so far is that they have no qualms about making what I call "bullshit arguments" because they win so often by intimidation and default.

[Amy26]

I have a business account with Chase as well. They do not require you to proove or provide a business name that the card goes with. I even called customer service and asked about the account and she told me it is not required to be a card for a business company its just a "business" expense card. It will be interesting if I get one of those letters too but I haven't used the card since November.

[UhhhOhhh]

Our attorney forwarded a letter they received from Chase regarding a CC that I had. It states that the debtor's account statements and court documents reveal that Chase may have a non-dischargeable claim. It then outlines all the charges between 11/18/08 and 1/23/09 which totaled 9k.

It states that "Chase is considering filing a Complaint to Determine Dischargeability of Debt with regard to this account. However, before making a decision whether to move forward with litigation, it would be helpful if your client could provide me with more information about the reason for the charges, what was purchased and her financial condition at the time the charges were made. I note that the account was opened in 2006 as a Business Account. However, your client does not list any businesses on her Statement of Financial Affairs. As you know the bar date for filing a Complaint is 7/6/09. Therefore, I ask that you contact me by 6/5/09. If I do not hear from you by this date, I will contact my client to discuss potential courses of action."

My attorney says while they may proceed with a lawsuit, it's not typical. My attorney has offered to help me settle the debt for $250 up front and 10% of the amount they are able to reduce the settlement by. Should I take them up on that or should I just wait to see if Chase proceeds? Should I respond to Chase at all as far as them wanting to know about the reason for the charges? About $4k was the animal hospital because my dog had a seizure and got very sick, $3k was because my daughter had a car accident, $1k was my son's college tuition and then there were miscellaneous charges. Any suggestions? Any experience with Chase in these matters?

Im really curious here...
reading your other posts.. it looked like you had spoken to one bk attorney (who it seemed was giving you some silly advice) and that your 341 was on the 6th of May... so.. did you end up going with that same attorney?

I ask because I thought if you had filed and creditors had charges or whatever which they felt werent dischargeable.. that they were supposed to file something with the Trustee and then it would be all handled through the bankruptcy 'normal course of proceedings and protocol'. ? At least thats what happened with mine... Dell felt that whatever it was wasnt exempt and so they filed something with the Trustee to that effect.

And to be honest I dont know enough about any of this to be any expert - but I just was wondering as I would have thought there wouldnt have been a need for your bk attorney to ask for more money or take 10% of any settlement if its supposed to be handled through the normal course of the bankruptcy anyway.. if you follow my thought?

My attorney had wanted more money to handle reaffirmation of my car (had I chosen to do that) but that was stated upfront and was outside the bk .. but Id think creditor challenges would be part of the bk.

[banca rotta]

Any suggestions? Any experience with Chase in these matters?

Before I suggest anything to you like whether or not to settle, what changed in your life to make you suddenly have to file for bk after making all those charges? Were there any health issues (hope not), loss of income, etc.?

Also did you make regular payments for a while after the charges?

Due to the timing it does look like you ran up this debt with no intentions on paying. Whether that's true or not doesn't matter to me. You need to explain this to them if they dispute this and you don't want to settle.

[DeadManCrawling]

Some of these "business" cards are just silly. In many cases, they were handed out like candy to people who were starting a business, hoped they were starting a business, or once had a dream that they should start a business.

They came gold-plated with the name of the BUSINESS emblazoned on gold lettering, as if that made it all official. They made the borrower feel more legitimate, having a "business card" and so on.

Most of them, though not all, were nothing but a glorified marketing scheme that worked very well--at least while the economy was good.

The CC companies knew nothing and cared nothing about any business, they only cared that they had another fish on the hook. If anything, I suspect they preyed on "business owners", hoping that the "business" aspect would make the debtor take the obligation more seriously.

Simple fact is, these cards mean nothing more than any other card, in most cases. There are exceptions, of course, in terms of business that actually had succes while the owner's personal finances tanked. Cross collateralization and other nasty things could apply in those deals, and BK protects the debtor but not the business.

That is, if you actually have a business that you hope to keep, the CC can attempt to strangle it by holding the business responsible for the debt.

In most cases, this is just another card, with threats that are just as empty as any other card.

You should wait out the time-frame, though, if you can. The look-back period applies whether it is a business card or a gas card.

[WC Nurse]

Im really curious here...
reading your other posts.. it looked like you had spoken to one bk attorney (who it seemed was giving you some silly advice) and that your 341 was on the 6th of May... so.. did you end up going with that same attorney?

Yes, we went with that same attorney. The day we signed our papers, he had us sign an additional paper stating that we were aware there were charges made within 90 days of filing. I asked him at that time if we should wait the additional 3 weeks so that the charges would be outside the 90 days....he said he didn't think we should wait and that the worse that could happen is they could make us pay those charges but he said it would be unlikely. We went ahead and signed the paper...probably should have waited.

Before I suggest anything to you like whether or not to settle, what changed in your life to make you suddenly have to file for bk after making all those charges? Were there any health issues (hope not), loss of income, etc.?

At the time I made the charges, my husband had been laid off for 6 months and I still had some hope that we might be able to pull out of the hole we were in if he went back to work. I really didn't want to file. I was soooo proud of the good credit we had built. Initially after he lost his job, I was paying all the bills that were in my name only or were joint, and stopped paying just the things in his name only, thinking I could keep my good credit and only he would have bad credit then. As his unemployment continued (and still continues), I realized that the only logical thing to do is file.

Since the bk courts think of pets as a luxury, I guess they would think my dog's hospital expenses are a luxury, along with my son's college tuition and fixing my daughter's car (which she needed for college) after her accident. I also paid for my case manager and occupational health nurse certificates (not absolutely necessary but helpful with my job).

As far as it being a business card, I'm not sure why they offered it to me. I did work as an independent contractor for awhile...maybe that's why? I just know they sent me an application, the terms looked good, and I applied and was given the card...with a $15k credit limit. They never asked if I had a business, what my business was, etc.

I guess we'll just have to wait and see what happens. I'm crossing my fingers that we don't have to pay it since my husband is still out of work and we are behind in our mortgage right now. My dream is for the bk to be discharged with no problems, my husband to go back to work, for us to catch up on our mortgage, pay off the HELOC, my student loans and our vehicle and finally be able to breath a little!

[LuciluS]

Yes, we went with that same attorney. The day we signed our papers, he had us sign an additional paper stating that we were aware there were charges made within 90 days of filing. I asked him at that time if we should wait the additional 3 weeks so that the charges would be outside the 90 days....he said he didn't think we should wait and that the worse that could happen is they could make us pay those charges but he said it would be unlikely. We went ahead and signed the paper...probably should have waited.
If he knew there was a chance, what was the urgency in filing? If there wasn't one, IMO this is his fault and he shouldn't charge you. Hopefully this will all 'blow over', but, if not, I might mention the fact you asked about waiting 3 weeks in a very nice way.

At the time I made the charges, my husband had been laid off for 6 months and I still had some hope that we might be able to pull out of the hole we were in if he went back to work. I really didn't want to file. I was soooo proud of the good credit we had built. Initially after he lost his job, I was paying all the bills that were in my name only or were joint, and stopped paying just the things in his name only, thinking I could keep my good credit and only he would have bad credit then. As his unemployment continued (and still continues), I realized that the only logical thing to do is file.

Since the bk courts think of pets as a luxury, I guess they would think my dog's hospital expenses are a luxury, along with my son's college tuition and fixing my daughter's car (which she needed for college) after her accident. I also paid for my case manager and occupational health nurse certificates (not absolutely necessary but helpful with my job).

Yes, Trustee would consider your pet's expenses as a Luxury. I know how you feel, because the month after we met with our Attorney, our furkid (shih tzu) was dxed with severe skin allergies, and crystalization in her bladder. We've spent over $2,000 on prescriptions and prescription dog food. Just ordered a 3mths. supply of her prescriptions before Attorney requests the 2 mths. bank statement before filing. In my heart, my Son is 'Priceless' and we struggled to get him through College. Same thing with your Daughter. You couldn't be a 'Taxi Driver' for her.

As far as it being a business card, I'm not sure why they offered it to me. I did work as an independent contractor for awhile...maybe that's why? I just know they sent me an application, the terms looked good, and I applied and was given the card...with a $15k credit limit. They never asked if I had a business, what my business was, etc. I recall, I had a business credit card. It came in the mail. I filled out the application as being Disabled and received the card in my regular name.

I guess we'll just have to wait and see what happens. I'm crossing my fingers that we don't have to pay it since my husband is still out of work and we are behind in our mortgage right now. My dream is for the bk to be discharged with no problems, my husband to go back to work, for us to catch up on our mortgage, pay off the HELOC, my student loans and our vehicle and finally be able to breath a little!

Ya Know, Dreams Have Come True! Wishing you the Best Of Luck so Sending Good Karma Your Way

Luci

[jadams]

Ohhh, I misunderstood that they were recent -- but just beyond the 90 days.

I would be much more concerned now that you've clarified they were within the 90 days. You're now within the automatic presumption of abuse issues.

The charges are large enough I would definitely seek out proper legal advice and make sure your attorney lays out all the options and their full consequences. You don't want to screw up $9000 because he/she didn't bother to fully explain something.

$9000 within the 90-days is probably enough to justify the card company paying for a lawyer to draft some papers and make an issue.

[catleg]

This is kind of a funny situation. The reason Chase needs to prove that you did not have a "business" is because the 90 day presumption of non-dischargeability only applies to consumer debts.

So let's say they file an AP.
They need to win on the fact that this was a consumer debt.
They need to win on the fact that this was a luxury item.
Suppose they win. What do they end up with?
A non-dischargeable, non-performing loan owed by a person in the middle of a bankruptcy case. What do you suppose their best case collection value on that account is?

Oh, and very nice of your attorney to try and negotiate a settlement fee for himself to cover up for his negligence!! I think I'd want to rat this guy out to the judge or the bar association, not that anything would really come of it.

Perfect example of why people hate lawyers.




(i) for purposes of subparagraph (A)--

(I) consumer debts owed to a single creditor and aggregating more than $500 [$550] for luxury goods or services incurred by an individual debtor on or within 90 days before the order for relief under this title are presumed to be nondischargeable; and

(II) cash advances aggregating more than $750 [$825] that are extensions of consumer credit under an open end credit plan obtained by an individual debtor on or within 70 days before the order for relief under this title, are presumed to be nondischargeable; and

[Dollar amounts in subsections 523(a)(2)(C)(i) and (ii) are adjusted on April 1 every 3 years by section 104. Adjusted amounts effective 4-1-07 are in brackets.]

(ii) for purposes of this subparagraph--

(I) the terms "consumer", "credit", and "open end credit plan" have the same meanings as in section 103 of the Truth in Lending Act; and

(II) the term "luxury goods or services" does not include goods or services reasonably necessary for the support or maintenance of the debtor or a dependent of the debtor.

[WC Nurse]

$9000 within the 90-days is probably enough to justify the card company paying for a lawyer to draft some papers and make an issue.

Oops...I guess I should clarify....only about $1500 was within 90 days...the rest was prior to the 90 day mark but still somewhat recent...in November and December of last year. Hopefully, that helps and they won't proceed. Only have 5 weeks to go till we're in the clear. Thanks for the good karma LuciluS! I'll need it!

[banca rotta]

Luxury or not charging up like that while unemployed unless it's items such as food, clothing, etc. looks like you charged with no intentions on paying. Almost anytime you borrow with no means to pay it back looks this way.

You may want to ask your attorney about settling this for 50% and just pay it out after discharge.

You can fight it which may be expensive for you to pay your attorney and if you lose you will have to pay it all back plus interest.

Sorry to mention what another poster already did but you should have waited at least 9 months and made some payments.

[WC Nurse]

I just wanted everyone to know that we didn't respond to the letter and Chase didn't take any action! We passed the 60 day mark on 7/6/09 and are now just waiting to be discharged!