AP filed will it trigger other creditors to file as well??

[Chey]

Hi, I filed 13 on Sept 2, got a continunance on 341 due to being out of town for mandantory employment, I just got a AP from personal loan, the said I failed to tell about a loan taken several weeks prior, and for support payments that I make as well as saying I overstated income ( income on petition is 900 month less than when took out loan in 2008) They also said I failed to put down taxes owed which did not incur until notice in 2009 well after loan taken out, I am wondering the loan is 15k, filed AP was on 9-23-10 with summons and court date; what is the best way to handle this, should I fight it (they have a case in my mind since the loan and support was not on application) or should I answer summons, with affirm and deny statements, then try to settle with that creditor? I really would like to just settle it for say 9K over 2-3 years could handle that even with bk payment, I just dont want others to see it and start filing APs as well other debt is a personal line of credit and 3 credit cards thanks for Help

[AngelinaCat]

Hi Chey: Welcome to the forum. I moved your question into a thread of it's own, so that it can get the proper attention that it deserves.

Good luck to you!

[AngelinaCatHub]

It is rare that they go to this extreme. Usually an AP is a vindictive thing like from partners, or family/friends, loans. Now in your own opinion, was this a true error on your part or did you leave this off. I care less and you are anonymous here, but why I ask is this. You must answer that summons and usually a hearing comes before a trial. It will not in anyway damage your bk progress. It is only a case for that particular creditor. If you lose, THAT creditor will not be discharged and will get a judgment. If you fail to respond they will get a default judgment. Fighting it is all you can do. Don't deny anything not true, however you can ask for a complete accounting, go pro se' and ask for interrogatories and you can even address depositions (as they can). Getting a lawyer for this is very expensive, but not fighting it in anyway will also be and it will be haunting you for about 21 years here in FL anyway.

Call their bluff, show up, deny their figures, if you honestly forget an item or things changed, tell it that way. Do NOT perjure yourself as an AP is civil, perjury is a Felony. Attempt to stall and continue as long as the Judge will allow. This will cost them money. They may just approach you about a settlement. DON'T go to them. Act as if you are going to stonewall them. If it looks as thought they may want to word anything that could look criminal use your constitutional right and state, "before I answer you sir, your tone of this question resemble to ME an attempt to make any actions that you accuse me of, a criminal action so that I wish not to answer further questions on the basis that I believe you are attempting to make me a criminal, so I under my Fifth Amendment Privilege respectfully decline to answer anymore of your questions. THEN DO NOT as from that point on, you cannot "cherry pick" questions, all must be not answered.

Of course a lawyer is your best bet, but if you cannot do one, go and do pro se' the best of your ability. If a Jury Trial, this may aid you as you are this "little guy" being picked on by the big bad bully.

Been there, done that. Our AP was put aside back to a local suit which set long enough to be dismissed for non prosecution. 'Hub

[keptdigging]

A loan from 2008. My very uneducated guess: If they know what they're doing they'll settle for a lot less than 9K. No CC company would bother with this fact pattern. Unless you borrowed from an attorney who enjoys doing his own litigation, this will be expensive for them to pursue.

(Did you file pro se? Creditors who know what they're doing seem to be much more aggressive with pro se filers because you are probably much more easily intimidated.)

I'm going to go even farther out on a limb and guess that it this really got to a judge you'd probably just win. Get all the help you can from the people here who DO know what they're doing (not me!) and be strong.

Remember from their perspective: if they lose they risk having to pay your legal costs. If they win, they still have to collect and guess what... you're bankrupt. Yes you've got income to support a 13 but that could go away. And if I'm guessing right I believe they can't even begin collecting until your 13 is over.

Logically, then, 9K is their dream scenario.

Once again, let's get some people who know this stuff to weigh in... BUT the mere fact that your info wasn't 100.0% accurate does NOT mean they automatically win.

[HHM]

Definitely file an Answer affirming and denying the various claims.

The problem with settling this claim is that the debtor is in chapter 13. There is no mechanism to pay it unless by some chance the creditors was willing to defer payment until after the chapter 13 was dismissed or discharged. Just because the claim is declared non-dischargeable, does not make it a priority claim that can be paid ahead of other unsecured creditors in the chapter 13 plan.

So in that sense, you might as well fight it. Or, at least take the next steps in fighting by filing the Answer.

I agree with the other comments, your side is probably stronger than you think. Certainty, there is still a risk you could lose, but what is the down side. If you lose, you are in no worse off position than if you did nothing.

[keptdigging]

Realizing that APs are uncommon in general (especially by parties who know what they're doing), wouldn't they be even less common in a 13? My thinking: if the creditors wins the AP, they are out their legal costs immediately. But they have no upside, NO upside until the 13 plan is over. That is, during the life of the plan they'll only get what they would get as just another unsecured creditor who didn't file an AP.

It really seems like good money after bad for the creditor... certainly in this case. I realize the non-dischargeable debt is worth something and can even be sold... but worth the cost of an AP? And that's if you beat the odds and meet your burden of proof and win!

I did see where Amex did this once on this board, but their case looked strong--the debt was VERY recent, not a single payment made, etc. IIRC. And even in that case the debtor settled so no indication of just how far Amex would have pursued it.

[justbroke]

I think I'm with HHM on this. Adversary Proceedings (APs) are very rare in Chapter 13s. Usually, the creditor figures they'll get paid "something" in a Chapter 13. Your Chapter 13 percentage to the unsecured creditors must be very low. Additionally, the creditor is must believe that they have some sort of case.

Having wrote that, the AP must mention fraud several times, because that's about the only way that they would be able to win a dischargeability complaint. Proving fraud is difficult. A bank or financial institution has a fiduciary responsibility to at least validate things -- due diligence -- so they can't just say that you lied on some forms, they'd need to prove it by a preponderance of the evidence. I actually think you have a strong chance to win this because everything you mentioned appears to be based on events "after" the application or things that they may not have even asked in the application.

[chrisdfw]

Get an attorney and ammend your 13 to pay for him and pay less to creditors, if you are paying something to unsecured creditors I believe this would almost be like free representation. You can always dismiss the 13 and refile with an attorney if I understand correctly.

Get an attorney. You will not regret it. Either you win and they pay the attorney as well, or the attorney can be paid as part of the chapter 13 case, hopefully an attorney can confirm this. Talk to one.

I think an attorney would like to make some money defending this. They know they can get paid through the 13 or by the creditor that files an AP.

If the attorney can get paid through the 13, I think they can at least get you a better deal than you can get in most cases if you want to settle. They won't even be able to collect until the 13 is over anyway. Your income is going into the plan.

[keptdigging]

Just knowing your are represented may get them to back off. From the tales on this forum it seems like creditors are much more aggressive in APs with pro se debtors.

My attorney told me that I had enough handle on this stuff that I really could have filed myself... but I shared with her that pro se debtors seem to have a target on their backs for APs (or at least the threat and hardball settlement negotiations.)