If Creditor Objects - Ch. 7 - Possible Outcomes

[ApresMoi]

Attorney said during free telephone consult that a creditor 'may' object to some of the last charges I made on the cards, but, if so, might not be more than $1,500's worth. He also said waiting 90 days is no guarantee the charges would not be questioned (but recommended I wait anyway). The issue was my making the charges when I did not have the means to repay.

I really don't want to wait to file. As far as I'm concerned, that's just giving the creditors more time to sue. The purchases weren't for luxury items and on two of the cards, the spending pattern (right to the end) was the same (as were the payments...until they stopped). There was a small spike in spending (maybe by $200 more that month) on one card (because I had reached the limit on another card, so one 'usual' expense went on that card instead). The point I am trying to make is that these were not Lous Vuitton handbags that were charged, nor were they large amounts. I also took NO cash advances on any card.

In a Chapter 7, would creditor objections to these charges change the status of a Ch. 7 in any way? I would not have a problem paying them back that amount if I could so so over time. Could I still go forward with the Ch. 7 in those circumstances?

What are some of the possible outcomes if one of the creditors showed up to object?

Thanks all.

[justbroke]

A creditor's objection would only be on that specific creditor's claim. In other words, if you owe the creditor $10K and you charged it while they "thought" you were insolvent or couldn't pay... then the creditor may file a complaint (Adversary Proceeding/AP) asking the court to not allow the discharge of that specific creditor. That's it! Everything else would be discharged.

Now fighting an AP can be costly. Some people just settle with the creditor... others will call the creditor's bluff. (Many times the creditor is just bluffing.) However, even with a bluff, they may drag you through a Rule 2004 Examination (basically a deposition).

If it's only $1,500 and across a couple of cards, I would say that you would really have not issues if you wait out the 90 days. Reason why... an AP can cost at minimum $4K to prosecute, so most creditors don't bother for anything less than that amount!

So, what were you buying? If it was spent on true necessities you are even less likely to have issues! (Necessities, like food, clothing, gas for car, medical... but not for "designer" clothing, or eating out at expensive restaurants or "elective" cosmetic surgery...)

[ApresMoi]

A creditor's objection would only be on that specific creditor's claim. In other words, if you owe the creditor $10K and you charged it while they "thought" you were insolvent or couldn't pay... then the creditor may file a complaint (Adversary Proceeding/AP) asking the court to not allow the discharge of that specific creditor. That's it! Everything else would be discharged.

Now fighting an AP can be costly. Some people just settle with the creditor... others will call the creditor's bluff. (Many times the creditor is just bluffing.) However, even with a bluff, they may drag you through a Rule 2004 Examination (basically a deposition).

If it's only $1,500 and across a couple of cards, I would say that you would really have not issues if you wait out the 90 days. Reason why... an AP can cost at minimum $4K to prosecute, so most creditors don't bother for anything less than that amount!

So, what were you buying? If it was spent on true necessities you are even less likely to have issues! (Necessities, like food, clothing, gas for car, medical... but not for "designer" clothing, or eating out at expensive restaurants or "elective" cosmetic surgery...)

Gulp. This is what I am worried about. If I hire the attorney and pay him his fee and the filing fee, that's all I can come up with (for the foreseeable future). I certainly won't be able to pay for any "AP"! What then?

During the consult, I was left with the impression that all I might have to pay back would be $1K or $1,500. In other words, the charges that I made near the end, just before I stopped paying. Nothing luxury involved. Storage was a few hundred, and a salon visit (and no, it wasn't at Frederic Fekkai's) was around $100 (both charges put on one card). It looks bad as the charges were made four or five days before the missed due date/payment. EVERYTHING else (on all cards) was normal, usual, and absolutely not questionable. Even the card I put the storage payment on was not ALL that much more than I usually charged in a month, but yes, there was a small spike of a few hundred on that one card only.

I guess I was under the impression (from the atty consult) that $1K or so was all I might have to pay back, but it sounds like they could object to the entire amount? The entire amount I owe on that card (where the storage and salon visits were charged) is about 12K. I have had that account for years, and carried that balance for years, even when I was gainfully employed. True, the balance has crept up during unemployment, but I still always believed I would be employed (and could pay back the debt). Right up until I couldn't. There were a number of factors that led me to HERE, but it was not due to wild spending.

Maybe I better rethink that 90 day waiting period. And look into what I could do between now and filing to improve my position when I do go in. Like what could I do to show good faith. I would make minimum payments, but if I do that, there are no funds to file for BK. Though could make smaller payments. Like a hundred each.

The amounts on the cards are 12K, 14K, and 10K (3 biggies). I missed November payments, made a small payment on one card in December (the one I put the storage charge on).

So when are my 90 days up? From what date do I start counting? The due dates fall on the 1st, 4th and the 12th of the month. Last full payments were made in October (and since then I've made only one small payment on one card -- $75 -- in December).

Sorry, long post. Merci. Goes without saying, your observations are appreciated.

[justbroke]

So when are my 90 days up? From what date do I start counting? The due dates fall on the 1st, 4th and the 12th of the month. Last full payments were made in October (and since then I've made only one small payment on one card -- $75 -- in December).

Personally speaking about your case, I would say that you really have no issues. There may be some saber rattling from the creditor, but I don't see anything significant. The complaint would only be for the charges made within the so-called "presumption of abuse" period (90 days). Since it's well below my hypothetical threshold of $4K... I don't see the creditor even bothering if you wait at least 90 days from the time of the charge, to the time of filing.

Of course, time heals all wounds in bankruptcy. The longer you can distance yourself, the better.

[ApresMoi]

Personally speaking about your case, I would say that you really have no issues. There may be some saber rattling from the creditor, but I don't see anything significant. The complaint would only be for the charges made within the so-called "presumption of abuse" period (90 days). Since it's well below my hypothetical threshold of $4K... I don't see the creditor even bothering if you wait at least 90 days from the time of the charge, to the time of filing.

Of course, time heals all wounds in bankruptcy. The longer you can distance yourself, the better.

Ok, thanks. I'll go back and look at the charges to see if I missed anything. My only concern is getting sued or having an account frozen in the meanwhile.

I read today that going after bank accounts is becoming more common among debt collectors. Even if you have exempt funds (as I do) their attorneys can raise a fuss if you have commingled non-exempt and exempt funds. Once they freeze the account, it can take a long time to get things straightened around or to 'prove' the funds are exempt (meanwhile you are without funds, the banks are racking up fees, the landlord isn't getting paid, etc.). I'll set up a separate account for the unemployment benefit deposits from here on out. I am going to talk to someone tomorrow who can advise me about this. Once I rule out them getting to my funds (what a nightmare that would be), I will be more comfortable with a waiting period.

[frogger]

I read today that going after bank accounts is becoming more common among debt collectors.

Bank accounts are a lot of fun when doing collections. The big key is to be able to find them.

If you have not yet, you need to open a different bank account that has never been used to pay any debtor. And yes, the debtors do record your banking account information when you pay them by check, debit, or bank draft.

Collectors can't seize what they can't find.

[ecsclb1724]

I agree with the PP. If you have any bank accounts that are with the same creditor that you owe money to then you need to get the money out NOW.

[ApresMoi]

I agree with the PP. If you have any bank accounts that are with the same creditor that you owe money to then you need to get the money out NOW.

Yes, well aware. I will use up what funds I have in the account that I have used to pay the credit card companies previously.

I do not owe money to the bank that has my checking account. I also checked my bank's parent company and can find no affiliation with the cc companies I owe.

But the cc companies do have that bank account #. If I leave $50 in there (just to keep the account open), would they still seize just to hassle me? If it's safe to keep it open (but have only a few dollars in it) that would be my preference. However, if they can seize and then if my bank can rack up all sorts of fees, then perhaps I should close it. I know who is on autopay on that account and could easily cancel them.

Does anyone know? Thanks.

[ApresMoi]

I agree with the PP. If you have any bank accounts that are with the same creditor that you owe money to then you need to get the money out NOW.

x

[iv65536]

Yes, well aware. I will use up what funds I have in the account that I have used to pay the credit card companies previously.

I do not owe money to the bank that has my checking account. I also checked my bank's parent company and can find no affiliation with the cc companies I owe.

But the cc companies do have that bank account #. If I leave $50 in there (just to keep the account open), would they still seize just to hassle me? If it's safe to keep it open (but have only a few dollars in it) that would be my preference. However, if they can seize and then if my bank can rack up all sorts of fees, then perhaps I should close it. I know who is on autopay on that account and could easily cancel them.

Does anyone know? Thanks.

Total amount I had in a checking account at a bank on which I BK'd two cards: less than $5. No hassle from them about that acct, and I exempted it.

[music12]

your creditors won't know how much $$ you have in the bank account until they levy on it. if you have $50, they will get that minus the bank's levy fee, which ranges between $50 and $100. now, i don't know if you'll end up owing the difference to the bank...

it's not totally true that a creditor can't seize bank accounts they don't know about. all they need to do is summon the debtor to an examination, where you will be required to say, under oath, where all your money is. but this process could take a couple of months, and can only start after they have sued you and gotten a judgment.

i think you should wait the 90 days. if you can reduce the risk of an AP, it's well worth it.

now, i don't know whether banks have a system where they know not to levy on an account that has only exempt funds. my bank certainly did not care, and i am still trying to get the $$ back after a year... try to find out whether they can set up a special exempt account for you. i am not sure how they would do that, though, because i don't know how the bank can prevent you from depositing other, non-exempt funds in there...

[coolmom04]

sorry to hijack, but you are saying that we should open a new checking account if the credit card companies have any account information from previous payments? Yikes! That's scary. It never even ocurred to me that the cc companies could take money from the accounts without approval. I did make sure the cards didnt have our bank info stored for payments, etc., but that's about all I did. So... we need to open new a new account?

[ApresMoi]

your creditors won't know how much $$ you have in the bank account until they levy on it. if you have $50, they will get that minus the bank's levy fee, which ranges between $50 and $100. now, i don't know if you'll end up owing the difference to the bank...

it's not totally true that a creditor can't seize bank accounts they don't know about. all they need to do is summon the debtor to an examination, where you will be required to say, under oath, where all your money is. but this process could take a couple of months, and can only start after they have sued you and gotten a judgment.

i think you should wait the 90 days. if you can reduce the risk of an AP, it's well worth it.

now, i don't know whether banks have a system where they know not to levy on an account that has only exempt funds. my bank certainly did not care, and i am still trying to get the $$ back after a year... try to find out whether they can set up a special exempt account for you. i am not sure how they would do that, though, because i don't know how the bank can prevent you from depositing other, non-exempt funds in there...

*****

I called around yesterday trying to find out how (other than going all cash) I can protect funds from seizure. Would you know if prepaid debit cards would work? Or can they get those as well?

I read on one site that it's a good idea to send a letter to your bank stating that all funds in an account are exempt (if that is the case), I have not yet verified whether that would stop someone from freezing it. If there's a real risk, maybe the best thing is to close the accounts, use check cashing sevices to cash the unemployment check, then use money orders to pay my bills. That would be highly inconvenient, I must say.

Let's say I wait the 90 days, but get a summons on day 80. Couldn't I close my accounts immediately upon receiving the summons? I don't want to close them now, since I don't know whether I 'have' to.

No accounts have been sent to debt collectors that I know of, but I am coming up on missing the third payment. Definitely getting nervous. Made some calls yesterday to try to get more info about California law in this regard, but have not found any solid answers yet. if anyone understands how this works in CA, or how I can protect what little I have, please post!

Thanks in advance.

[ApresMoi]

Bank accounts are a lot of fun when doing collections. The big key is to be able to find them.

If you have not yet, you need to open a different bank account that has never been used to pay any debtor. And yes, the debtors do record your banking account information when you pay them by check, debit, or bank draft.

Collectors can't seize what they can't find.

This has been my main account for 20 years. If I leave $10 in it, what are the potential consequences to me if it gets frozen?

Also, I read that even if I open another account that I have never used to pay the creditors with, if that new bank works with chexxsystems, that that account would also be at risk, as chexxsystems coordinates with debt collectors. I have not verified whether this is true, but it certainly sounds plausible. Do you know?

There must be some website out there to help those who are trying to protect what little they have (survival funds) from debt collectors I know what I have is 'exempt'.

What I do not know is a) what fees I might incur if the account is frozen; b) how long it would take to 'prove' the funds are exempt; and c) the amount, under CA law, that i can have as 'exempt' in any one account.

[music12]

first, i think you are several months away from any accounts begin frozen. you don't need to close anything before you get a summons.

it's scary what you say about chexsystems. i didn't think of that.

once my account got frozen, i went cash only for a very long time. it's inconvenient and costs money for the money orders, but it's the only 100% safe thing to do. like in birth control, you can get up to, like, 99% control, but if you want to be 100% sure, just don't do it!

i'm still trying to get frozen money back. it was all unemployment, exempt, but nobody - including the court, mind you - cared. on paper, the law helps the little people. in practice, it helps the big guys.