*** AP Filed Against Me - Please Help!! ***

[AZJack9]

Just before my chapter 7 was about to be finalized, a credit card company filed an AP against me.

They filed a complaint seeking exception to discharge pursuant to 11 U.S.C 523 A 2 A.

They stated that I spent $7000 within 70 days (7 months before I filed BK) and then stopped making payments because my monthly income covered all but $30.00 of my expenses. Because of this, they stated that I deceived them, and that they want their debt to be an exception.

When I filed BK, my paralegal asked for the prior 6 months of income which came out to the figure that they presented on the AP. The fact is that when I was making these charges, I had a different income. I had a regular renter who was paying me about $600.00 a month. I did spend a lot of money in a period of two months, but I had every intention of repaying it until my regular renter moved out. Because of my divorce a few months before that, I didn't have the income to make my payments.

I made most of the charges between March 12 and May 22 (restaurants, hotels, food, gas, one plane ticket, and $1300 at a jewelry store). I made a minimum payment of like 30 or 40 in April, then they raised my APR through the roof in May which also made it very hard. I filed BK at the end of December 09.

I filed an answer to the AP already and it is showing in PACER with all of this evidence.

IS there anything else I need to do? Do I have a chance?

[GWBcasualty]

Just before my chapter 7 was about to be finalized, a credit card company filed an AP against me.

They filed a complaint seeking exception to discharge pursuant to 11 U.S.C 523 A 2 A.

They stated that I spent $7000 within 70 days and then stopped making payments because my monthly income covered all but $30.00 of my expenses. Because of this, they stated that I deceived them, and that they want their debt to be an exception.

When I filed BK, my paralegal asked for the prior 6 months of income which came out to the figure that they presented on the AP. The fact is that when I was making these charges, I had a different income. I had a regular renter who was paying me about $600.00 a month. I did spend a lot of money in a period of two months, but I had every intention of repaying it until my regular renter moved out. Because of my divorce a few months before that, I didn't have the income to make my payments.

I made most of the charges between March 12 and May 22 (restaurants, hotels, food, gas, one plane ticket, and $1300 at a jewelry store). I made a minimum payment of like 30 or 40 in April, then they raised my APR through the roof in May which also made it very hard.

I filed an answer to the AP already and it is showing in PACER with all of this evidence.

IS there anything else I need to do? Do I have a chance?

I may be over-thinking the all BK process and maybe I am worrying too much... but I stopped using most CC about one year ago and ALL of them more than 6 months ago.

I would have never thought of filing BK if I had spent $7k within the last two months.

I wish you good luck, but from my point of view it doesn't look good.

[frogger]

I made most of the charges between March 12 and May 22 (restaurants, hotels, food, gas, one plane ticket, and $1300 at a jewelry store).

You're bold. I wouldn't have done that. You probably need to get ready to get your wallet out.

[AZJack9]

Maybe my summary wasn't clear. The charges were made in May, 7 months before I filed BK and my income was higher at that point. I think that the creditor doesn't have a good case.

[NoMoreCards]

Unfortunately it can be very expensive to fight a AP. I suspect what hurt you was not only the amount you charged, but the items as well. 7K worth of spending in a 70 day period is a big red flag when filing only a few months later. (even 7 months)

I hope you are right and they don't have a good case, but from what you've stated here...I would be considering some sort of settlement with them, as it may be the least expensive option.

[AngelinaCat]

You mention having a paralegal. Do you actually have a lawyer? If so, what does he/she think about it?

Do you have a good paper trail of your income, i.e., cancelled checks from the renter, income tax statements, etc.? While the burden of proof is on the creditor, you would be wise to be as well prepared as possible.

Also, if you do have an attorney, in most cases, defending against an AP is a different matter than the original bankruptcy, and the attorney may want you to enter into a new contract with more fees.

Good luck!

[AZJack9]

I have a paralegal and she says that my "answer" is very good. Yes, I have cancelled checks. I want to fight this myself because I feel that I have a very good chance.

[AZJack9]

I just called the attorney for the credit card company and offered him a settlement of 20% on all of the charges I made after my last payment. $920 of $4700. He sounded like it may be something that the bank can work with. I sent him an email with the offer. He stated that the bank will review it and get back to me.

[keptdigging]

Really interested in how this goes, so please keep updating. Looking to find the real risk of APs like this. Real risk = what will they take to settle.

Also, care to disclose which bank?

Thanks for updating and good luck!

[AZJack9]

It is First National Bank of Omaha. I am waiting to hear back from their attorney at this time.

[albacore44]

It is First National Bank of Omaha. I am waiting to hear back from their attorney at this time.

Thats not one of the big boys, sounds more like a regional bank. Probably why they have more time to scrutinize those who are defaulting. 7 months from last charge to filing is a pretty good amount of time to let things rest before filing. They must be angry.

[California11]

My lawyer said that typically when she notifies credit card issuers that she's fighting the AP, the creditors give in or at least are willing to settle for <50% of the amount they're questioning.

The reason is that it's expensive for the issuer to send a lawyer from NYC or San Francisco (this seems to be where most of the big issuer's law firms are located) to our local courtroom to fight the proceeding and perhaps get only a couple thousand out of the person.

Anybody experience this? I'm curious, as I'm in the "60 day window" right now.

[AZJack9]

I just found the following notice on PACER...any input as to what the telephone conference is for and what my next actions should be?

Defendant having answered; IT IS HEREBY ORDERED:
Pursuant to Bankruptcy Rule 7016, the parties are to appear at a Scheduling Conference not to exceed 15
minutes at the U.S. Bankruptcy Court, [XXXXXXXXXXX], 5/18/10 at 11:00 AM .
1.
Except as modified or limited by this Order, Federal Rules of Civil Procedure 26 through 37 (as amended
2009), made applicable to this proceeding by Rules of Bankruptcy Procedure 7026 through 7037, shall apply
to all discovery in this proceeding.
2.
The parties shall hold their initial meeting pursuant to Rule 26(f) no later than 21 days prior to the Scheduling
Conference ordered hereby. At the parties' discretion and where appropriate, this meeting may be held
telephonically.
3.
The parties shall make the initial disclosures required by Rule 26(a) not later than 14 days following the Rule
26(f) meeting held pursuant to paragraph 3 of this Order.
4.
At the Scheduling Conference, and after consultation with the parties and considering the nature of the claims
to be resolved, the Court will decide whether further compliance with Federal Rules of Civil Procedure 26(a),
(d), (e) (1), and (g) (1) is necessary or appropriate in this proceeding. If further compliance is excused, limited
or conditioned, the Court will enter such further scheduling orders at the Scheduling Conference as may be
appropriate in the circumstances.
5.
It is the Court's intention to set this proceeding for trial at the time of the Scheduling Conference. Counsel are
to have access to such information as they deem necessary to advise the Court of the reasonableness and
convenience of the trial date set. Motions for a continuance of the trial date based upon information available
to counsel at the time of the Scheduling Conference will be disfavored.
6.
Date: April 15, 2010 BY THE COURT

[AZJack9]

California11 - The attorney for First National was trying to point me in that direction within two minutes...he asked for 60%. Knowing that banks settle with debt consolidation companies for 20-25%, I would start there and work your way up.

[AZJack9]

OK so I finally just heard back from the bank's attorney. They submitted a counteroffer of 60% which they are claiming to be about $5000 with monthly payments of $100. I feel that it is a little high and I am waiting for them to put it in writing.