I am freaking OMG i am seriously freaking

[luv2bfrugal]

I just got a letter from my attorney from one of my cards attorney saying this


Based upon an initial review of this account and our recommendation, our client is considering filing an adversay proceeding pursuant to 11 usc objecing to the discharge of all or a portion of the debt

they are saying i did a cash advance in july for 7399. it wasnt a cash advance i did a balance transfer to a 0 percent card.

omgggggggg what does this mean i am sick someone please help me.

i filed on nov 28

[justbroke]

A balance transfer is an advance of cash. At least that is what some think. This is because Credit Card companies treat balance transfers as cash advances.

Here's your (lawyer's) defense;

... [t]he critical factor to me is that Judge Speer took a moment to consider the important distinction between a “balance transfer” and a “cash advance.” Just because the credit card treats them the same (by charging higher interest, for example) doesn’t mean the law does. First, the presumption of fraud should not apply. But, more importantly, he noted the meaningful difference in the transactions. A cash advance is an increase in debt at high interest, while a balance transfer is a a refinancing of existing debt — something one typically does only to get a better “deal” on repayment. That is a critical difference which credit card lenders would like judges to ignore.

Credit Cards and Bankruptcy: Beware Recent Use -- Courtesy Bankruptcy Law Network

All your lawyer needs to do is respond to the letter and inform the creditor that a balance transfer, regardless of how the Creditor treats it, is not a cash advance under any law. He will let them know that filing an AP is a waste of their time.

[shabam]

Who is the creditor?

[Help!]

Deep breath. Based on what you posted, it sounds like this is ONE creditor objecting to the discharge of $7399. Unless there is fraud (and the burden of proof of that would lie with this creditor) it does not affect the discharge of your other debts. The worst that can happen is that you have to repay the $7399. Search the forum... there have been many adversary proceedings and the outcome has not always been in favor of the creditor!

[luv2bfrugal]

I know what happened. July was our worst month and i had trasfered it so I wouldnt have to pay a bill that month. I was robbing peter to pay paul. OMG what is going to happen?? I cant pay these thats why I FILED BANKRUPTCY!!!!! IM IN TEARS.

[justbroke]

I know what happened. July was our worst month and i had trasfered it so I wouldnt have to pay a bill that month. I was robbing peter to pay paul. OMG what is going to happen?? I cant pay these thats why I FILED BANKRUPTCY!!!!! IM IN TEARS.

Carefully read what I wrote above.

You have no problems (period). (So long as you have a competent attorney.)

[luv2bfrugal]

hi justbroke, im sorry my heart is racing lol
i just recieved this like 10 mins ago. its a bad feeling i felt like i was sinking. I thought great, i file bankruptcy, there goes my credit , i have NO money and still have bills omgggggg. LOL

I read that and it makes sense. I have a very VERY good lawyer. He will be calling me back shortly.

[shabam]

How many payments did you make to the creditor since requesting the BT?

Who is the creditor again? some creditors are more likely to pursue debt than others.

[justbroke]

How many payments did you make to the creditor since requesting the BT?

Who is the creditor again? some creditors are more likely to pursue debt than others.

shabam, I believe this is all irrelevant.

A balance transfer is a refinance of antecedent debt. It is not new debt, and that's the basis for any lawyer who would defend an adversarial proceeding in a bankruptcy matter.

So, while the OP may answer your questions, they don't have any weight as to the issue.

[CatsInTrouble]

ok, I know I'm not in your place, but Who Cares?

How much debt are you going to get rid of? Your worst case is that you have to payback 7000 over some long run. This has nothing to do with the rest of your bankruptcy!

This is not a freak out moment. You're going to mess up your health.

[HHM]

This is bluffing by the creditor. Justbroke is correct, the creditor would have a very difficult time proving fraud in an old balance transfer transaction.

I would ignore the letter and see if they actually file the AP.

[shabam]

shabam, I believe this is all irrelevant.

A balance transfer is a refinance of antecedent debt. It is not new debt, and that's the basis for any lawyer who would defend an adversarial proceeding in a bankruptcy matter.

So, while the OP may answer your questions, they don't have any weight as to the issue.

I have read a number of court cases (adversary proceedings) yet cannot say that there is a solid judgment indicating that BT of existing debt is a slam dunk safe zone. Depending on the creditor, companies like Amex pursue AP to death. A creditor can claim that the debtor undertook substantial debt ( yes even a BT) knowing that they did not have the means to pay it off. I have seen a number of similar cases where the court has ruled in the creditors favor, especially if the cc is new. I have seen some creditors pursue as little as $3k.

If they made a few payments then they maybe safe. If they transferred the debt and made no payments then this can be an issue if the creditor decides to pursue it further.

luv2bfrugal, keep in mind this is not the end of the world. Worst case scenario is that you will go on some sort of payment plan to pay it off. After all, the creditor may simply be bluffing as mentioned earlier.

[justbroke]

I have read a number of court cases (adversary proceedings) yet cannot say that there is a solid judgment indicating that BT of existing debt is a slam dunk safe zone.

Can you provide the case citations. Would be interesting to read why the particular defense didn't work. If it was truly just shuffling debt by using one card to payoff another, then using the paid off card to acquire new debt... this could be the reason to have it challenged and sustained.

(I ask for case cites, because I can't find one case which aligns with your post which states that a balance transfer is a cash advance and subject to the presumption of abuse/fraud. I did find several cases where the debtor won, and at least two on the Trustee attacking the transfer as preferential, but the debtor did not lose anything in the scuttle, only the creditors did.)

Otherwise, I personally see no basis.

If they made a few payments then they maybe safe. If they transferred the debt and made no payments then this can be an issue if the creditor decides to pursue it further.

APs are always interesting.

In the end, the key is whether the original balance transfer was fraudulent to start with. I believe this is the only grounds to have it non-dischargeable, and it's up to the creditor to prove it was outright fraud.

By fraud, I mean that the debtor never intended to pay the debt. Or, that the debtor knew they were insolvent and couldn't pay the debt. Of course, making a payment or two relieves some of the appearance of fraud.

I don't think this balance transfer issue is any different than proving any other fraud within a lawsuit. The keyword being fraud.

The one case I did find is nothing like the case here. In CHASE MANHATTAN BANK, USA, NA, versus KIMBERLY JEAN ADEE (Adv Proc No A05-90003-HAR, Case No. A04-01481-HAR Chapter 7)**, the debtor admitted to having done the transfer after talking to a bankruptcy lawyer. Now that's pure fraud and would be non-dischargeable regardless of whether it was a balance transfer or not.

** UNITED STATES BANKRUPTCY COURT -- DISTRICT OF ALASKA

[HHM]

Whether a BT is fraud, is fact specific to the case. I agree, a BT case is not a slam dunk for the debtor to win, but the fact that the transaction was a BT does not make the case easier for the creditor.

[shabam]

Can you provide the case citations. Would be interesting to read why the particular defense didn't work. If it was truly just shuffling debt by using one card to payoff another, then using the paid off card to acquire new debt... this could be the reason to have it challenged and sustained.

(I ask for case cites, because I can't find one case which aligns with your post which states that a balance transfer is a cash advance and subject to the presumption of abuse/fraud. I did find several cases where the debtor won, and at least two on the Trustee attacking the transfer as preferential, but the debtor did not lose anything in the scuttle, only the creditors did.)

Otherwise, I personally see no basis.

APs are always interesting.

In the end, the key is whether the original balance transfer was fraudulent to start with. I believe this is the only grounds to have it non-dischargeable, and it's up to the creditor to prove it was outright fraud.

By fraud, I mean that the debtor never intended to pay the debt. Or, that the debtor knew they were insolvent and couldn't pay the debt. Of course, making a payment or two relieves some of the appearance of fraud.

I don't think this balance transfer issue is any different than proving any other fraud within a lawsuit. The keyword being fraud.

The one case I did find is nothing like the case here. In CHASE MANHATTAN BANK, USA, NA, versus KIMBERLY JEAN ADEE (Adv Proc No A05-90003-HAR, Case No. A04-01481-HAR Chapter 7)**, the debtor admitted to having done the transfer after talking to a bankruptcy lawyer. Now that's pure fraud and would be non-dischargeable regardless of whether it was a balance transfer or not.

** UNITED STATES BANKRUPTCY COURT -- DISTRICT OF ALASKA

I read the cases a while back but didn't log them. I will be having a look for such cases again soon so I will post them as I find them again.

I think it is definitely a case by case basis. If someone applies for credit, transfers a balance and then files for BK in a few months (while making only one or no payments) this is a red flag for the creditor. I have seen creditors use various rules and avenues to catch the debtor and make the debt non-dischargeable.

Such cases are rare though considering the volume of BKs that go through, no questions asked. Yet every now and then some creditors seek to make a debt non-dischargeable and win.