Last Day to Object-And Someone Did!

[justbroke]

My Bipolar spouse charged 23K on thier credit card, among others, and their objection was based on the current income not supporting the debt(s), so it seems in their opinion, that we never intended to pay the bill(s).

If that's their objection and their case is based on your income not support the debt... may be rebutted! The banks have a fiduciary requirement to make sure they lend you money based on certain criteria.

So, I think they are going for a 523(a)(2) ruling that it's non-dischargeable. The only way that could be, is that they prove fraud, or they relied upon a false document. If your income, as stated on your application forms, or any tax returns you provided to the Bank to get that line of credit, were false, then they could have a case.

If these were the credit line access checks that they send in the mail, and they were unsolicited, you could have a case that you didn't initiate the "loan". If you purchased luxury items with the money, then they could have a stronger case.

As the Judge wrote in In Re Manning 280 BR at 185... "[f]raudulent intent should not be implied solely based on the use of a credit card when there is no immediate ability to repay.". In other words, a finding of fraudulent intent should not depend solely on the Debtor's financial condition at the time that the credit was extended.

The general things the court will consider are as follows:

1. the length of time between the creation of the debt and the filing of the Bankruptcy
2. whether the debtor consulted a bankruptcy attorney before the debt was incurred.
3. the number and amount of the transactions.
4. the financial condition of the debtor at the time the debt was incurred.
5. whether the debt exceeded the debtor's credit limit.
6. whether multiple debt were incurred on the same day.
7. whether the debtor was employed, or if not, whether the debtor had meaningful prospects for employment.
8. the financial sophistication of the debtor.
9. whether the debtor's spending habits changed suddenly.
10. whether the debts were incurred for luxuries or necessities.

(In Re Manning 280 BR at 186)

If I were you... before deciding to proceed with defending yourself in this complaint... look at the items above. Think about what was going on. If you lose, you'll owe $23K, and maybe court costs as well. If you win, you won't owe anything. You could switch to Chapter 13, and these debts would be discharged when you receive your Chapter 13 discharge.

Your other alternative, than a Chapter 13, is to stipulate and basically agree to repay some portion of the $23K.

[Lookadat]

JB-I appreciate you responding to my problem. They ought to add a mental capacity consideration to all that you mentioned. My spouse (thought she) was promised a high paying job, and then decided to spend the paychecks before the job materialized. I have never been involved with anyone having a manic phase of bipolar, but they I was convinced that all my time spent working for the money was finally paying back because we were going to get somewhere with two incomes. You have no idea what a manic phase of bipolar can do to your world. I have asked the attorney to advise whether we can win or settle, obviously going the less expensive method. But if I have to repay, I will have to borrow the money. Great!

[justbroke]

My spouse (thought she) was promised a high paying job, and then decided to spend the paychecks before the job materialized.

Actually, that's a defense!!! In one case I reviewed, the debtor spent money even though they wre temporary unemployed. However, the defense was that she reasonably expected to start a new job with a good salary. (See item #7 above... whether the debtor was employed, or if not, whether the debtor had meaningful prospects for employment.)

But, if it was all in her head, and you can prove mental instability, you might win on that too!

[ForumReader]

Actually, that's a defense!!! In one case I reviewed, the debtor spent money even though they wre temporary unemployed. However, the defense was that she reasonably expected to start a new job with a good salary. (See item #7 above... whether the debtor was employed, or if not, whether the debtor had meaningful prospects for employment.)

But, if it was all in her head, and you can prove mental instability, you might win on that too!

This is something else what the creditor is trying to do and sorry to hear that you are in this position, Lookatdat. JB, wouldnt Look have to come up with additional fees like BTS said to pay around $5K in legal fees in order to win this case? Sounds like the cc is a stickler on this one. Makes me nervous to know that there are creditors out there who will try to do anything to get back.

[debtmonster]

If anyone charged me $5k more in legal fees, I could not afford to pay it. Will something like that happen over a $1,000 debt?!?!

[justbroke]

This is something else what the creditor is trying to do and sorry to hear that you are in this position, Lookatdat. JB, wouldnt Look have to come up with additional fees like BTS said to pay around $5K in legal fees in order to win this case?

Depends on what the lawyer wants to charge. The lawyer, if they win, can recover the fees from the plaintiff (credit card company).

The legal fees are definitely something you must consider when defending a complaint on dischargeability. It is not cheap. Working with your attorney, you decide on whether you'll not fight it, and stipulate to a lower amount.

[shabam]

Has anyone ever seen a field online where you enter a decrease in salary or request a decrease in credit line? No of course not.

The banks have no issue with closing your account when you do not use it but have a problem identifying spending sprees and restricting you account then.

This is why justbroke, I say when need a trustee or a judge who will ask the creditor what do you do to prevent or minimize the loss? Leaving it up to the card users is simply not good enough.

[shabam]

JB-I appreciate you responding to my problem. They ought to add a mental capacity consideration to all that you mentioned. My spouse (thought she) was promised a high paying job, and then decided to spend the paychecks before the job materialized. I have never been involved with anyone having a manic phase of bipolar, but they I was convinced that all my time spent working for the money was finally paying back because we were going to get somewhere with two incomes. You have no idea what a manic phase of bipolar can do to your world. I have asked the attorney to advise whether we can win or settle, obviously going the less expensive method. But if I have to repay, I will have to borrow the money. Great!

I think you have a solid defense. Is your wife's condition document? If so, she is clearly not in the right state of mind to have deliberately made those transaction to defraud the creditor. I wish I has some money to give you as I alone would fund your defense to take this cunning creditors down. I'm sick of them acting like their the poor innocent child in all of this.

Was the card from a Farm Bureau or something? Did you make any payments towards it? Approximately how much unsecured debt did you owe?

[debtmonster]

I think just filing for bankruptcy, most of the banks will write you off instantly even if you're not discharged.

I know when I checked on a couple accounts, they already removed me from their system and put me as a zero balance, long before getting any discharge papers.

So even if you don't get discharged, won't filing BK keep a lot of people off your back for a while?

Until payday comes, my bank account is running on fumes. I simply couldn't cough up any kind of extra money right now. My money is all spoken for during the next several months.

[justbroke]

This is why justbroke, I say when need a trustee or a judge who will ask the creditor what do you do to prevent or minimize the loss? Leaving it up to the card users is simply not good enough.

This is a perfect question to pose in your defense. Banks do have some responsibility from a fiduciary standpoint to prevent loss. They can't rest solely on a false application. They should have vetted the application and income claims. However, in some cases, the debtors submitted "false" IRS 1040 tax forms to the bank! The only way around these is to require everyone to file 4506-T (IRS Transcript Request) but that just causes more paperwork so most lenders don't do this. AMEX had me send in 4506-Ts for 3 tax years. No way can they say they didn't have factual information.

[justbroke]

So even if you don't get discharged, won't filing BK keep a lot of people off your back for a while?

No. The only thing that keeps them at bay, is the automatic stay. Trust me, as soon as your case is dismissed and that notice goes out... WHAM, the phone calls start again. This takes about a week or two, but they will start hounding you.

Remember, the SOL clock starts again, and if you owe a creditor that kind of money ($20K)... they are going to sue.

[shabam]

I am in a similar boat where I quoted anticipated income rather than actual income at the time of applying. Now I only did this in applications which asked for annual household income. Had they called up or asked for any verification I would have had no issue with telling them. Had they asked for actual current monthly income, I would have stated it. But at the time of applying you do not exactly think about the what if I file for BK or what if I cannot pay.

It's disappointing to realize that through my own ignorance, I have now given them something that can be used against me to claim I was trying to defraud them.

[Lookadat]

Yes, we are all likely to be poor, but newly educated in the facts of finance. My unsecured was over 65K, all charged in 2 months. I went to work, and she went shopping. Complete strangers benefited from her generosity, it was pathetic that someone didn't refuse her gifts. She spent time in the Hospital, twice now, isn't that punishment enough? State Farm doesn't have all these facts, otherwise they probably wouldn't try to recover any of it. Or maybe they would. Now I only hope she is around to testify, as this latest development has driven her to the brink of suicide.. I hope a mental health defense is appropriate.

[shabam]

Yes, we are all likely to be poor, but newly educated in the facts of finance. My unsecured was over 65K, all charged in 2 months. I went to work, and she went shopping. Complete strangers benefited from her generosity, it was pathetic that someone didn't refuse her gifts. She spent time in the Hospital, twice now, isn't that punishment enough? State Farm doesn't have all these facts, otherwise they probably wouldn't try to recover any of it. Or maybe they would. Now I only hope she is around to testify, as this latest development has driven her to the brink of suicide.. I hope a mental health defense is appropriate.

You have a solid case. I would pursue it. There is zero chance they can claim that you deliberately tried to defraud them when your wife was not in the right state of mind to do so. I guarantee a judge will throw this case out.

I personally think you should write a letter to state farm advising them of this and saying by pursuing it in court, they are going to waste both of your time and will probably end up paying for your legal fees.

You mean the $65K was charged in the just 2 months?

[debtmonster]

No. The only thing that keeps them at bay, is the automatic stay. Trust me, as soon as your case is dismissed and that notice goes out... WHAM, the phone calls start again. This takes about a week or two, but they will start hounding you.

Oh, I didn't know that they mailed out other notices letting them know the discharge failed. That's a buzzkill.