General AP question

[brendamc67]

When a credit card company files an objection, are they only able to file on a large charge, or can they file for smaller ones?
My question is based on this... my husband and I have several thousand (probably about $80k) in cc debt that we've racked up since 2008 (yes, in two years). Part of it (about 20k) was done prior to 2008. Anyway, I was looking over our statements for the last year (we are hoping to file in August for Chap. 7 BK) and I saw that we had made a charge of $650 to Home Depot back in August 2009. That's the largest charge we've made in the last year (although there were some $400 ones). If AT&T Universal Card files an objection, would they only be able to on that particular charge or would they on the entire debt of $25,000.
Thanks!

[keptdigging]

I worry a bit about that myself (hey bk is the big leagues and I worry about everything.) In my case its a 9 month old advance in the $2-3K range on an account with a total balance of about $20K. I wonder if the $20K makes them feel like they have more leverage, makes them more likely to sue, and that they figure might as well sue for the whole balance. Because, well, this is America and they have a right to sue even if their case is very weak.

Maybe some of the gurus will chime in for both of us.

btw, your charges seem way to small to generate an AP. But I'm just getting to ready to file... and there are experts on these boards.

[brendamc67]

So ... I found others...

In June of last year, I made a balance transfer of $5,500 to Chase credit from Sears Gold Mastercard. We are hoping to file in August, so perhaps that will be far enough back to not worry about...

I know it doesn't work this way, but I just keep thinking that one little thing is gong to show up and we'll end up with the whole thing getting thrown out. I am prepared to perhaps have to pay a little bit (a couple of thousand wouldn't kill us over a few months), but not 10's of thousands.
I will be so glad when this is all over, but we have so far to go....

[keptdigging]

Rule of thumb seems to be that 12 months is more or less a safe harbor--they are unlikely to even think about filing an AP (let alone have a shot at winning it.) Also my attorney says that balance transfers are less problematic than advances. (Doing a b/t to get a better rate is hardly evidence of non-intent to pay.)

But I hear you and I know what it feels like. An objective observer can look and say "you're fine" but they don't have their future on the line.

One other thing that's been observed here: This is NOT a crowded section in the forum, and most of the APs actually mentioned are not from big bank credit cards. Evidently, as much as we worry, APs are really not that common.

I'd feel better if I could wait my 12 months though.

[HHM]

It would be VERY RARE for a CC to object over a cumulation of smaller charges. Even then, the amounts need to be well over $2,000 cumulatively before they would even take an interest. And even, then, it would be rare.

In general, they can ONLY object to the objectionable charges. They cannot object to the entire balance unless they had reason to do so.

Let's take a typical example. If the debtor was running a balance of $20K on their credit card for years and making minimum payments, then in March, goes to a Casino and does 3 cash advances for $1,500 each ($4,500 total), and then files BK in June; the credit card is likely to object to discharge, but it can only object to that $4,500, not the entire $20K balance.

[brendamc67]

Gotcha! Thanks!

[hooferator]

I thought the new law specifically said 90 days on luxury purchases, because I remember thinking how small a window that is. I mean, I've known I was probably going to file for at least ten months. If I'd had any available credit, I could have easily bought all kinds of stuff as long as I stopped three months before filing.

[HHM]

I thought the new law specifically said 90 days on luxury purchases, because I remember thinking how small a window that is. I mean, I've known I was probably going to file for at least ten months. If I'd had any available credit, I could have easily bought all kinds of stuff as long as I stopped three months before filing.

The 90 day window is what is known as the "presumption" period. If the charges were made in that 90 day window, the court "presumes" the charges are fraudulent and the burden in is the debtor to prove otherwise.

A creditor CAN STILL object if the charges are older than 90 days, but at that point, the burden of proof is on the creditor to prove the charges were fraudulent.

[Rick9972]

In my BK a major CC sent papers to me and my attorney stating that they were going to file an objection to me paying my tax bill with their CC 120 days prior to filing. ($700.00) My Attorney laughed, sent the CC representative a email, copying me, that he would see them in court if they felt that lucky.

We never heard another word, and nothing was filed.

Attorney later told me this was a common practice, just to see if they could get a settlement out of the debtor.

[adm]

I agree w/Rick9972- but of course I'm new to this and only just had my 341..but it's very expensive to get involved in any legal proceeding. Say it was 2k, the time it takes to file a motion, argue it, etc-- with the cheapest of attys running $175/hr...what would they get back?

[keptdigging]

Theoretically the creditor can add their legal fees to the suit. On the other hand, if they lose they can wind up having to pay your legal fees. And losing is a real possibility.

However a friend of mine who knows nothing about BK has this thought: Why sue someone who doesn't have any money? The creditor will have pay their lawyers (or the firm they give it to on contingency will be out real time and costs), they might also have to pay YOUR lawyers, winning is iffy and collecting if they do win is iffy.

No reason to not write a letter in hope of an easy settlement though.

[catleg]

Exactly. Why sue someone who is broke? That's why you see so few AP's, except for outfits like casinos that try to make you suffer when you go bad on them.

[NEbankruptcy]

However a friend of mine who knows nothing about BK has this thought: Why sue someone who doesn't have any money? The creditor will have pay their lawyers (or the firm they give it to on contingency will be out real time and costs), they might also have to pay YOUR lawyers, winning is iffy and collecting if they do win is iffy.

While APs by unsecured creditors are very low (I've never had one in 5 years by a credit card company), the real reason to object if there is a justifiable reason would be that garnishment proceedings could commence for a long period of time to collect a portion, if not all of the debt. There is nothing a debtor can do to stop a garnishment (with the exception of exempt funds like SSI) since bankruptcy is no longer an option for another 3 years (to file a 5 year chapter 13) or 8 years (for another chapter 7).

[HHM]

Exactly. Why sue someone who is broke? That's why you see so few AP's, except for outfits like casinos that try to make you suffer when you go bad on them.

Actually, whether someone is broke is not really a factor in the decision to file an AP. The fact that the creditor can get a judgment that can NEVER be discharged, is quite valuable.

However, AP's are still rare. For 90% of cases, AP's are not even a possibility. For 5%, it is usually pro se debtors that were too dumb to hire attorney and find out how to avoid an AP, and for 2%, the debtor didn't inform their attorney. The other 3% out and out committed fraud and got caught.

[eastbaybk]

Its always difficult to predict what a bank may do. [For example, only a few years back banks would never sue people for unpaid accounts in the couple thousands, which now seems typical (which is completely idiotic for them since it costs quite a bit to go after those accounts AND if people aren't paying before they sue them I've never quite figured out why they think they will just because they now have a Judgment).] Back to the original question about Home Depot: Not likely they'll be an objection. Costs too much and unless there is some type of fraud you should be just fine. As far as that balance transfer, given the length of time you should be OK though folks should never transfer from one account to another within a few months of filing. A year is a safe bet.