Objection to Dishcharge settlement letter?

[joke0445]

Hi, I have been reading this forum and have found some interesting stories, however, since each one is unique I thought I would throw my own story out there and see if I could get some opionions. Any thoughts would be much appreciated....thank you

We filed for chapter 7 april 21, 2010; 341 meeting was held may 19; last week we received a letter from our attorney with an attachment from a firm threatening to take adversary proceeding action against us. The letter states the following

Dear counsel, our firm has been retained to represent( creditor x) in this bankruptcy proceeding. Based upon an initial review of this account and our recommendation, our client is considering filina and adversary proceeding pursuant to 11 usc 523 objecting to the discharge of the debt. A review of the account reveals the following: Between November and February your client accumulated 6642 in retail charges. We believe that there is evidence and a sufficient basis to dishcharge the debt in this matter. As you are aware, once we bring a successful non dischargabilty action against your client, all or a portion of your client's debt may survive the bankruptcy.

....to paraphrase the rest, it goes on to state that before they obtain local counsel, they are giving us the option to settle at 5000.

My lawyer doesnt seem to think it is a big deal stating that they are just putting out "feelers".....I, on the otherhand am worried that it could get costly if they decide to go ahead with the adversary proceeding.....

I kept paying on all of the bills until the day we filed for bankruptcy, so its not like I charged with the intent to not repay it(it just got to be an endless cycle of paying bills with no money leftover for living expenses). They didnt specify what charges they were objecting to, so I am a little confused( we didnt have luxury purchases, but we did use it for groceries, gas and a couple of mortgage payments for a rental property that we could no longer maintain). I have another card with the same company for over 18,000 dollars and they arent pursuing it, so for this to pop up is a wall banger for me( we are discharging appx. 90,000 in unsecured debt, and the rental property; no asset case according to trustee). thanks for taking the time to read my story.

[catleg]

If I was an attorney I think I would choose to make my living sending threatening letters to people and hoping some percentage would just cave and send the money. I would listen to your attorney. They're just fishing.

[justbroke]

Based on the data provided, that letter is only that... a threat to file an complaint in an adversary proceeding. If you actually had been paying and it was more than 90 days out, they'd have to prove insolvency or fraud which could both be difficult.

I'd heed your attorney's advice on this one.

[joke0445]

Thank you, I appreciate your thoughts. I was charging up until about 2 weeks before we filed, but nothing extravagant( In mid December we charged 2900 on the card for windows for our home, but again, I told my attorney this from the beginning and he didnt seem to concerned before we filed). Why do we even have 341 meetings for creditors and trustees if they can still object after the fact( I get meeting the trustee, but the meetings are also for the creditors right?). At any rate, I will just have to cross my fingers and hope another creditor wont pop up.....I think we only have another month to go, so if they were going to file they would be pushing it pretty close dont you think, or from what I have gathered from this site, they can ask for an extenstion.....? So from what you are saying is that they can only go back 90 days before we filed, 'cause they are using november thru February time frames and specifying the whole amount and not specific charges....

thanks again

[justbroke]

I was charging up until about 2 weeks before we filed, but nothing extravagant

Probably why they are concerned. They probably figure that you KNEW you were going to be filing and should have known you couldn't pay it back. However, if this is for necessities like food, clothing, gasoline to get to work, medicine, medical care, etc... it's okay. However, if it was more than $550 in charges in the 90 days preceding, and they were "luxury" (non life supporting), then you are in a non-dischargeability situation!

Why do we even have 341 meetings for creditors and trustees if they can still object after the fact( I get meeting the trustee, but the meetings are also for the creditors right?).

You misunderstand what the 341 Meeting is for. It is only to "examine" a debtor under oath. It's the only "free" chance that a creditor has to question the debtor while they are under oath. Objections always happen outside that meeting and should a creditor really need to know things, they can request a Rule 2004 examination which is akin to a deposition. The 341 Meeting is "really" for the panel Trustee to question you and many times the United States Trustee (UST) will use it to question you as well.

At any rate, I will just have to cross my fingers and hope another creditor wont pop up.....I think we only have another month to go, so if they were going to file they would be pushing it pretty close dont you think, or from what I have gathered from this site, they can ask for an extenstion.....?

Yes, they can, along with requesting a Rule 2004 Examination.

So from what you are saying is that they can only go back 90 days before we filed, 'cause they are using november thru February time frames and specifying the whole amount and not specific charges....

They can go back much much much much further than that if they can prove actual fraud or that you were insolvent at the time you made the charges.

The 90-days is just a "presumption" of insolvency and non-dischargeability. Anything else has to be proven.

[joke0445]

JustBroke, so what you are saying is that they might have a case then? I used the card up to two weeks before filing, so then why arent they using that as the dates in question( they are using november thru feb, and we filed in april)? It is my understanding they they have to object to specific charges, but in my case they are threatening with AP all charges from november to february timeframe. Also, what is a 2004 examination?

[joke0445]

I would also like to point out that we have over 90,000 in cc debt, and we have another card with them for a lot more than 6,000( they must be going after this debt because it is the only one we used consistently until we filed, however, we did pay the minimum dues until we filed); so looking at our financial picure as a whole, you can see just by the amount of debt that we werent in good financial standing( so does ii even matter if we paid the minimum due at all?). Is it common for creditors to send out "feelers" as my attorney calls it, to people in bankruptcy? I guess this means at best to expect some form of settlement. My attorney did notify me right away and sent me a copy immediatly after receiving it. He also wanted me to send him statements and itemize my charges with explanations; however, I was receiving electronic statements at the time, but those privelages were revoked as soon as we filed bankruptcy and I no longer have access to my online account(s)(which is understandable but I cant see my statements to look at the charges for the months in question). Long story short, I dont have my statements so I called the creditor to have them faxed to my attorney and was told they could only send three months( so I cant get november, december or January's statements). Will this one creditor ruin my chances of getting ALL of my debt discharged, or just their debt( I am looking for worst case scenerio here).

[justbroke]

They haven't made a "case" yet, so the fact that you charged up to the date of filing, will just add to their presumption. Just work through your attorney.

[keptdigging]

Thanks for sharing this--we all learn when we see what tactics creditors are using. Please let us know how this proceeds (or, hopefully, how it DOESN'T proceed.)

Remember it will cost them significant resources to actually pursue an adversary proceeding. It costs them virtually nothing to send this letter--note that they didn't even examine your charges very carefully.

And worst case scenario, it is just the creditor(s) who object and the charge(s) they object over. And, of course, they already offered a (not at all generous) settlement.

[joke0445]

Heard from my lawyer in an email last night. Here is the gist of what he said "I haven't received a response from (creditor x's) attorney regarding my request for a more specific basis for their claim. However, they must file any objection by July 20. So if I don't hear back from them we'll just wait and hopefully the clock will run out."

On that note, he doesnt seem too concerned( so lets cross our fingers and see if it works). thank you all for responding; I would love to hear more( it helps me put it into perspective from non objective standpoints). thank you