$10K in cash advances - possible AP

[KittyisBroke]

I have been reading this forum for months and it is great! Now it is my turn to ask for opinions.

We had our chapter 7 341 on July 27, no creditors. Seemed OK. The next week, our attorney got a letter from an attorney representing FIA Card Services (B of A) saying they were considering filing an AP due to a little over $10K in cash advances in the six months before filing. They offered us a settlement of $8000 on $10,300 in debt. The last cash advance was for $322.50 on April 10th and we filed on June 24th, 75 days later. So it was more than 70 days from filing and less than $750. All other cash advances were in January and February making them 120 days or more from filing.

I never paid the credit card bill after that last cash advance because we had finally decided BK was our only solution. Prior to that I hade never been late and always paid.

What is the general consensus of opinion, are we liable for this debt? Will they follow through with an AP or is this letter just an attempt to collect?

[2manybills]

I think they are empty threats! They are seeing what they can get out of you. Were the cash advances to buy groceries, pay bills, etc.?

[Amy26]

That is quite a chunk of change in cash advance. Did you take the cash out to yourself? Did it pay other bills? Chances are they are "considering" AP to see if you will fork over the money just in case. Odds of them filing one? Personally, I'm not sure since it was 120 days+ for the majority of the money and you were making payments on it.

Personally, I think they are just seeing if you'll be silly enough to accept their offer. The worst that can happen is they do file an AP (would have to prove it) and then you'd have to make payments on the balance.

I got a reaffirmation agreement on a 2,600 wedding ring purchase that we made 3 weeks before filing... my lawyer told me to ignore it.

[2manybills]

Also, someone correct me if I'm wrong here, but if they file an AP and lose, they are responsible for your attorney's fees too.

[KittyisBroke]

The cash advances were trying to keep our selves afloat. But here in South Florida, as Realtors, it is just impossible right now. We went from making $300K to making $30K! My monthly expenses

1850 - first mort.
650 - HELOC
1355 - Health Insurance
3000 - Credit card payments (yes, way too much credit card debt)
250 - Power Bill
100 - Water Bill
200 - Phone, ISP, mobile
90 - Cable
800 - Food
200 - Auto Insurance
1000 - Real Estate Expense

We are realtors and had virtually no income from August 2008 until March 2009 when we finally had a closing. We just kept thinking that things would turn around, we'd get some sales, pay things down and continue on our way. WRONG! We went until the end of July before we had another closing. Lots of contracts, but can get things closed! Short appraisals, banks find every excuse not to close!

[2manybills]

I think you are okay. We had $3K a month in credit card payments. Don't even know how I did it as long as I did.

[aljohnson007]

I dealt with the same scum bags over a cc bal of $19k and rec'd threats but they were in the process of writing it off when I filed ch7. Personally, I don't believe will prevail if they do file. Just make sure you can account for where the funds went.

[KittyisBroke]

I am planning on just ignoring the letter. Then if they file an actual AP we will deal with it. If we decide to settle, what is the lowest we can expect to negotiate? I am not inclined to negotiate as they have to prove fraud and that is fairly hard to do. Although it might be worth it to settle just to move forward. I do have funds in a 401K that could be used to pay them.

Do they have all the way up to the 60 day mark (Sept 25) to file the AP?

[Amy26]

Well if you used the money strictly to pay your bills (and you can prove it) I honestly don't think they could put up much of a legitiment fight. They also did not show up to your 341... so they didn't care enough about it to put it on record. I believe they can file an AP up to the 60 days but I'm not sure. I think you'd see a few more threat letters before they would do that though.

[2manybills]

Your 401K is protected. I would not do that. They do have to prove fraud, it's not like you want to Maui on the money or bought a fur coat! They would have to prove it.

[Calthius]

About a year ago I settled a C.C. Debt with Bank of America. The original debt with all the interest and fees added to it was $8,600 and it was settled for $1,500. They actually were the easiest company to work with. This was before we filed a Chapter 7 due to a business failure.

[HHM]

In this scenario, you should call their bluff or offer a low ball settlement $1,000.

The burden will be on the attorney that you intended to defraud. If he didn't attend the 341 and ask at least a few questions, they are in a very weak position (granted, they could schedule a 2004 exam; a deposition).

You will need to get with your attorney and hope that he is willing to help you (most "discount" BK attorneys charge extra for dealing with AP's, and aren't very good at it).

[mike258]

I got a similar letter from a attorney representing Chase for a large balance transfer I did 6 months prior to filing.

I paid my attorney $100 to send a response and 3 weeks later we got a letter saying that Chase would not filing an AP.

You mentioned you used the cash advances to stay afloat. If you send a response letter, make sure you don't say that. It makes it sound like you knew you were insolvent at the time of the cash advances which FIA's attorney could interpret as fraud.

[KatInVa]

Wow you spend $800. for food? How many kids do you have? With just my husband and I we budget just $150. to 200. a month. I cook everything from scratch, we eat very healthy (plus very little meat). Right now were spending less since we have a garden.

[Amy26]

I dunno where you live, but food is very expensive in my area. I think my attorney put 750 a month in food for just me and my husband on my schedule. I can make one trip to the grocery store just for a week or less and spend almost 150 bucks. And that's just buying normal stuff like meat, vegetables, bread, milk, soda, etc...

If I was to only budget 150-200 a month in food I think we would be living solely off ramen noodles and spam.