Received a letter from Creditor's Attorney

[Alix23]

Hello everyone,

I'm new to this site and this is my first post. I've spend a few hours reading alot of posts on here about AP. but I was not able to find one that was similar to my case. so here it is:

My attorney received a letter date Jan 22, 2010 from the a creditor's attorney stating that they will file a AP with the court if we do not respond or settle with them. I only hired the attorney to file my case upto the 314 meeting. so technically I dont have an attorney. but they emailed me today Feb 17th, telling me that they received this letter at the end of January!!

Creditors (and their attorneys) claim that I used my card in Aug 16 for a charge/cash advance of $4500 and also that amount exceeded my credit limit.
the original amount was infact $4500, but i got a refund of $450 credited back to my card, so that leaves the amount charged to $4050. In addition, this charge DID NOT put my account over the limit as I had at least $3-4000 available balance. The charge was not a cash advance or for a luxury item, it was used to pay for my wife medical expenses (as she was pregnant at the time with some complications), so in all honest, I did not use the card to buy a car/tv/etc... it was used for a medical expense.

Now, i dont know what to do... ignore it and see if they actually file an AP, settle it? the settlement amount in one time cash payment of $3000 which I do not have. and I can not afford to hire an attorney to fight this.
I believe that I have a good cause/argument against their charges, but at the same I do not want to create headaches for myself in the future.

My 314 meeting went smoothly. no creditors were there. and i was in and out in like 20 minutes.
My last question is this, if I ignore it, and it gets filed, will this affect my while BK and other debts, or would I be responsible for this portion of undischarged debt?

I would appreciate any help/suggestion.

Thank you

[backtoschool]

Hello everyone,

I'm new to this site and this is my first post. I've spend a few hours reading alot of posts on here about AP. but I was not able to find one that was similar to my case. so here it is:

My attorney received a letter date Jan 22, 2010 from the a creditor's attorney stating that they will file a AP with the court if we do not respond or settle with them. I only hired the attorney to file my case upto the 314 meeting. so technically I dont have an attorney. but they emailed me today Feb 17th, telling me that they received this letter at the end of January!!

Creditors (and their attorneys) claim that I used my card in Aug 16 for a charge/cash advance of $4500 and also that amount exceeded my credit limit.
the original amount was infact $4500, but i got a refund of $450 credited back to my card, so that leaves the amount charged to $4050. In addition, this charge DID NOT put my account over the limit as I had at least $3-4000 available balance. The charge was not a cash advance or for a luxury item, it was used to pay for my wife medical expenses (as she was pregnant at the time with some complications), so in all honest, I did not use the card to buy a car/tv/etc... it was used for a medical expense.

Now, i dont know what to do... ignore it and see if they actually file an AP, settle it? the settlement amount in one time cash payment of $3000 which I do not have. and I can not afford to hire an attorney to fight this.
I believe that I have a good cause/argument against their charges, but at the same I do not want to create headaches for myself in the future.

My 314 meeting went smoothly. no creditors were there. and i was in and out in like 20 minutes.
My last question is this, if I ignore it, and it gets filed, will this affect my while BK and other debts, or would I be responsible for this portion of undischarged debt?

I would appreciate any help/suggestion.

Thank you

When did you file for bankruptcy, and when was your 341? If you made a large charge card purchase right before you filed, then that can trigger an AP.

Your creditor does not know the details of what you purchased. Even a medical charge could be for plastic surgery or liposuction or something as far as they are concerned.

If you made the charge within 90 days of filing, then the creditor has an case because the creditor can claim that you knew you were insolvent at the time of filing.

Did you make any payments on the card after making that charge? These details will help us determine how strong the creditor's case is.

[justbroke]

This is a tough situation to be in, if your lawyer isn't representing you anymore. Can you afford to pay him to file a response? Regardless, you have two choices. Respond to the creditor or call their bluff by not responding and see if it goes to a complaint (Adversary Proceeding).

I personally believe the debt is dischargeable because it was for medical debt and not for any other item (luxury doesn't really matter). Since you probably don't want it to go to trial you may want to respond but ever so carefully. Basically just that it was medical related, did not exceed the credit limit, and there was still credit available which you didn't use. Hopefully they decide to give up.

This will not affect the discharge of your other debts. This creditor would need to file that complaint (AP) before the 60 days after your 341 Meeting.

[Alix23]

Thank you for your reply. I really appreciate your time.
I filed on January 6, 2010 and my 341 meeting was just last week on Feb 10th.
The disputed charge was in August of last year so it was like 5 months before I filed for BK.
I did not purchase or use the card after that and like I mentioned, I still had plenty of credit left. The only reason my cards were over the limit is after I stopped payments, they cut my available credit just above the balance so with all the finance charges (BofA was like 27% APR)and late payment fees, it went over the limit. I believe I did make a one or two payments, before I stopped completely.

anyhow, is there any way I can file a response myself without an attorney? what is that response called in this case?

[justbroke]

anyhow, is there any way I can file a response myself without an attorney? what is that response called in this case?

Since it appears they didn't file a Motion with the court, you'd just be answering the letter. If you do answer, see if your (cheap) attorney will take a quick peak at it for free... even if he charges you $50, it could be worth it? Don't elaborate on things. Just answer their probing questions with SHORT and to the point responses. Remember, this could (will) be used against you later. What you're trying to do though is making them feel that pursuing the complaint is fruitless and a waste of time.

I would seriously at least consult with your attorney on this. It may be worth your while. I would hate to see you shell out $3K to settle, but at the same time, I'd hate to see this go to trial and you lose and be out $4,500 plus attorney fees (their attorney fees).

[Alix23]

Since it appears they didn't file a Motion with the court, you'd just be answering the letter. If you do answer, see if your (cheap) attorney will take a quick peak at it for free... even if he charges you $50, it could be worth it? Don't elaborate on things. Just answer their probing questions with SHORT and to the point responses. Remember, this could (will) be used against you later. What you're trying to do though is making them feel that pursuing the complaint is fruitless and a waste of time.

I would seriously at least consult with your attorney on this. It may be worth your while. I would hate to see you shell out $3K to settle, but at the same time, I'd hate to see this go to trial and you lose and be out $4,500 plus attorney fees (their attorney fees).

Thank you again for the info.
well, I have emailed my attorney's "assistant" and asked him if they can write a response letter explaining my situation. and I told them that I would pay for their services. but as of now, I have not heard back yet. When I talked to the assistant, he was kinda hinting that i should take the settlement and that the lawyer might not take on these cases, eventhough I have a good reason as to why I used the card. He kinda scared me a little by saying if you lose, they'll garnish your wages, and I have to pay for all the fees and that would be a lot more than $3000.
now, my thing is, If I pay the $3000, wouldnt that put a red flag on my case and other creditors might come out and say, hey if you paid so and so, $3K, why cant you pay us $500....etc. its like opening yourself up to more of these collections.
anyway, I thank you again for your input. I will put an update here if anything else happens.

[PoorGrammyinBK7]

Sounds like you have a crummy lawyer (and I am not one - so take this as just one layperson's opinion)

Was it an actual cash advance or run through as a charge to pay for medical expenses?

Either way, I really don't think you have to worry about this since it was 5 months before you filed and used for necessary medical expenses, and especially if you have paid some payments since then. From what I've read the creditor filing the AP has the burden of proof, which I think would be very difficult in this case.

If no motion has been filed, they are probably just trying to intimidate you into settling, which has happened to many. IMHO they are bluffing. But I don't know all the details and again, I am not a lawyer.

Hopefully one of the lawyers on here will reply soon.

[Alix23]

Sounds like you have a crummy lawyer (and I am not one - so take this as just one layperson's opinion)

Was it an actual cash advance or run through as a charge to pay for medical expenses?

Either way, I really don't think you have to worry about this since it was 5 months before you filed and used for necessary medical expenses, and especially if you have paid some payments since then. From what I've read the creditor filing the AP has the burden of proof, which I think would be very difficult in this case.

If no motion has been filed, they are probably just trying to intimidate you into settling, which has happened to many. IMHO they are bluffing. But I don't know all the details and again, I am not a lawyer.

Hopefully one of the lawyers on here will reply soon.

Couldn't agree with you more. He is a crummy lawyer. he's not even willing to even write a response letter for me with pay!! so I guess I have to ignore the letter completely or find another attorney to write one up. But I have to start all over and find an attorney I can afford that can do this. so.....its gonna be a headache!
To answer your question, it definitely was not a cash advance. The card was used (striped) to pay for medical service. I like to mention that I had 2 other cards with zero balances with credit lines totaling $18K that was not even touched, plus I had plenty of available credit on the cards i was using.(I had a 814 FICA score at one point)

I am also convinced that this letter is just a scare tactic to try to get me to pay that amount. Also, with that amount, is it even worth their while to pursue this? I'm assuming with all the fees taken out, the creditor might get less than 50%!!

I hope that a lawyer on here can give me some advise soon.

[justbroke]

Well, the lawyers won't give you advice on here, but may mention something. Personally, I'd fight it, but that's me. You weren't insolvent at the time, it wasn't within the statutory 90-days (for presumption of abuse), wasn't a cash advance, wasn't an eve-of-bankruptcy purchase, and wasn't for a luxury purchase. I assume that you also made "some" payments on it (at least the minimum) between when the charge was made and filing.

[backtoschool]

If there was a five month gap between the charge and your filing and you made at least a few minimum payments until you filed, then I do not think that the creditor has a case in an adversary proceeding.

The problem is, that an AP is a separate trial and will cost you money until you win and recoup that money from the creditor.

I do not think the creditor has a strong case here at all.

[AngelinaCatHub]

I agree with 'JustBroke' and 'Backtoschool'.

My opinion is write a nicely written letter, pointing the blame at them in a diplomatic way in that whatever "over limit" was caused by their own hands, and that you intended to pay until "unforeseen" circumstances happened, and that you ARE NOT ABLE TO PAY AT ALL, and there was absolutely no intent of fraud.

Please respond, but very carefully worded as, yes anything can be used against you. Make no statement acknowledging you owe anything, except you are responding. Make no mention of any amount. Use the word "assumed" debt, or "alleged" amount liberally (gawd I hate that word), and by all means do respond.

A lawsuit can be a nasty little bother. 'Hub

[tigergem]

As a second pro se person I am going to pipe in here and say that I "think" if you list your affirmative defenses in the letter back to them just as the others have said here, that they will probably back off. And. I think those same affirmative defenses backed up with a little bit of case law and a couple of statute citings would make this particular AP do-able for you, even if you had to do it yourself. I don't think I would be so very afraid of this one, and I am considerably more timid about rocking the judicial boat than justbroke is. Of course be sure to send it by certified mail and keep a copy.

[Alix23]

Thank you very much everyone for all your help and comments.
As you all suggested, I am going to write a letter to them explaining the situation and as Hub mentioned, I'll be brief and to the point!

tigergem, you mentioned something about stature citings that I can use. can you tell me where I can find such information?
is there a template out there I can use to start off my response letter?

Thank you again for your time

[tigergem]

Well. In your letter, which will be just like any other business type letter, you don't really need a template...you want to just mention all the things that justbroke and backtoschool wrote:

You weren't insolvent at the time,

it wasn't within the statutory 90-days (for presumption of abuse),

wasn't a cash advance,

wasn't an eve-of-bankruptcy purchase,

and wasn't for a luxury purchase.

Mention if you also made "some" payments on it (at least the minimum) between when the charge was made and filing...a five month gap between the charge and your filing and you made at least a few minimum payments until you filed...

... and pay special attention to what AngelinaCatHub said as well!

Those are your "basic" affirmative defenses that you would (only if you have to, of course!) build a court defense on. And you would find that there are statutes you can cite primarily in the Federal Rules of Bankruptcy Procedure, I think, for each one of those listed points that you are making. You don't have to go to all that work just write the letter, though.

Officially I think the term that is used for them having caused the over limit by changing the terms of your credit might be "unclean hands"... but again that is not something you would need to worry about unless it actually progresses to an AP.

You should be able to write the letter pretty quickly and then do the homework on the statutes, after you have it sent off.

[PoorGrammyinBK7]

Hate to disagree with some of you guys - you probably know much more than me, but I just feel uneasy about him writing a letter to the creditor or the creditor's attorney. Still think you should ask another attorney, before doing any letter writing. Just my opinion.