BOA considering adversary proceeding. Advice/comments please.

[McMark]

My BK Atty received a letter from attorneys for BOA that says they are considering filing an adversary proceeding objecting to discharge on our $25,000 account, as a brief review of the account reveals that:

Between 5/16/10 and 7/11/10 we accumulated $2,900 in charges
Between 5/16/10 and 7/11/10 we incurred $4,000 in cash advance

and that they believe there is evidence and sufficient basis to object.

They give two alternatives. Stipulate to the $6,900, or pay a one time lump sum cash settlement of $5,000

The charges in question arose as the result of localized heavy rains and flooding in our basement, an attempt to fix it ourselves left us short to pay some bills, so we charged them.

The cash advance came up on 7/11/10 and was used to pay all of the expenses for July, including the $400 payment to BOA on the same day.

I am self employed and had one major client, and several smaller clients. The major client had cut back some due to legal issues of their own brought on by the economic crisis, but we were riding the storm out with them. On July 31, the companies VP stopped over at our home and told us the owners of the corporation were being sued personally to the tune of millions, and my working for them would never recover to pre economic crisis times, a permanent cut of about $4,000 a month on my income. Soooo.....we filed chapter 7 on 9/29/10. Our attorney had advised we wait 6 months, and after thinking about it, I did not see the point of postponing the inevitable, so he filed for us at our instruction.

I know now, I really should have waited...but that is water under the bridge at this point.

So the note from our attorney is..."Let me know what you want to do".

Thoughts/advice anyone?

If we stipulate, what happens there?

We could possibly borrow the $5,000 from family if we have to.

Our 341 is set for 11/8, and the BOA attorney wants an answer within 30 days.

Ugh!

Just want some input before calling our attorney on this.

Thanks Y'all!

[tobee43]

i actually think it will depend on where you are and how the courts view the 90 day law...

where we filed according to our atty, no ap can be filed until the charge was with the 90 period prior to the filling date. it appears to me if you last charges were 7/11..and being that you 341 is 11/8...not looking good...that's NOT even 90 days between the last charge you did and your 341.

now, seriously...i'd call your atty on this....what the heck was he or her thinking...???? one of the main questions any atty asks you prior to filing is;

have you charged anything within the past 90 days...and if so, before we file for you we must let some more time pass between now and filing????if the answer from with you was YES they he or she should have replied ok..then we need to wait until we file your petition or we could and most likely WILL run across a problem or two or three or ten........END OF STORY!!

i would be extremely upset with my atty on this...because actually, at this point your only way out would be, to, indeed settle with boa...(YUCKKKKKK) or take it all the way and end up having to pay the full amount..

if it were me...i'd would chose to opt out of this bk and ask the case be dismissed.....wait the time period and refile ....after all a new atty would cost you LESS than what BOA is asking you to pay them...i'd make the darn atty you have do it for nothing!! and......file a complaint against him or her.

[backtoschool]

I think B of A has a case. A large cash advance and large amount of charges less than 90 days before filing are grounds for a winnable AP on their part. You did not wait enough time to file. The legal definition of insolvency is 90 days before filing. They do not have to prove intent to fraud if you made the purchases within and took the advances within 90 days of filing because the bankruptcy standard is that within 90 days of filing, a person knows that they are insolvent and should not use cards.

I think you will lose this one unfortunately. If you decide to go to trial with it and lose, you will owe your legal fees (ap trials cost about 5k and are not included in the bk fees) and will have to pay their legal fees as well. The debt will become permanently dischargable. I am surprised when you filed, your attorney did not tell you you were at risk for an AP with that kind of expense so close to filing.

[McMark]

I guess I should have asked more questions prior to filing. It was 79 days from the last charge to filing, and 119 days from the last charge to our 341.

I had read this....

Under the old law debts totaling $1,225 or more to single creditor incurred within 90 days of filing for luxury goods were presumed fraudulent. Under the new law the dollar limit is dropped to $500. In addition cash advances of $750 or more within 70 days before filing are presumed fraudulent as well.

...and assumed that since the charges were not for anything luxury, and the CA was 79 days past, it would be OK.

Our attorney did say this was a possibility, but only on the CA, and then said they would probably offer settlement of half, which would have been $2,000. We were prepared to risk that, but $5,000....eeeek! Not prepared for that.

I don't think that we can "opt out" and have the case dismissed here. We may just have to bite the bullet and come up with the $5,000

It has been a downward spiral for us ever since a car drove through our living room a couple years ago. If it weren't for bad luck....

Such is life for the uninformed I guess. What more can they take from me. I'm about ready to chuck it all and go live in Central Park. Let them garnish my hiney there!

[backtoschool]

I guess I should have asked more questions prior to filing. It was 79 days from the last charge to filing, and 119 days from the last charge to our 341.

I had read this....



...and assumed that since the charges were not for anything luxury, and the CA was 79 days past, it would be OK.

Our attorney did say this was a possibility, but only on the CA, and then said they would probably offer settlement of half, which would have been $2,000. We were prepared to risk that, but $5,000....eeeek! Not prepared for that.

I don't think that we can "opt out" and have the case dismissed here. We may just have to bite the bullet and come up with the $5,000

It has been a downward spiral for us ever since a car drove through our living room a couple years ago. If it weren't for bad luck....

Such is life for the uninformed I guess. What more can they take from me. I'm about ready to chuck it all and go live in Central Park. Let them garnish my hiney there!

The standard is 90 days or more before filing and that is the minimum. For the large amounts you charged and took in a cash advance, ideally you should have waited a year. If the charge is within 90 days of filing, B of A doesn't even have to prove intent on your part to win the AP. They simply have to show that you charged within 90 days of filing and therefore by definition you knew you were insolvent and used the cards anyway. The 70 day standard typically only applies to smaller purchases. Large cash advances are treated like luxuries and are subject to the 90 day standard usually.

The AP is going to cost you your attorney's fees (extra fees on top of the bk fee), the non-dischargable debt, and the creditor's attorney's fees.

I hate telling anyone to settle, but in this situation, settling with B of A is probably going to end up costing you less money.

[nomore008]

BOA sent our attorney a similar letter. I am pretty sure the last CA was 90 days before we filed and my bank account was very much overdrawn. I didn't know that those bank charges could be included in the BK, so I got a CA.

[tobee43]

I think B of A has a case. A large cash advance and large amount of charges less than 90 days before filing are grounds for a winnable AP on their part. You did not wait enough time to file. The legal definition of insolvency is 90 days before filing. They do not have to prove intent to fraud if you made the purchases within and took the advances within 90 days of filing because the bankruptcy standard is that within 90 days of filing, a person knows that they are insolvent and should not use cards.

I think you will lose this one unfortunately. If you decide to go to trial with it and lose, you will owe your legal fees (ap trials cost about 5k and are not included in the bk fees) and will have to pay their legal fees as well. The debt will become permanently dischargable. I am surprised when you filed, your attorney did not tell you you were at risk for an AP with that kind of expense so close to filing.

bts...what do you think about mcmark going for a dismissal and then starting over???

i would think that is what i would do if the cost factor was that great??

input please

[backtoschool]

bts...what do you think about mcmark going for a dismissal and then starting over???

i would think that is what i would do if the cost factor was that great??

input please

If the attorney doesn't charge the OP for filing again, then that would be the cheapest way to do things, but they would have to pay on the B of A cards while they waited out the 180 days, and B of A would probably file a lawsuit right away, so it really would be a nail-biting close call to get to that 180 days. I think the OP is going to have to settle with B of A unfortunately.

[tobee43]

If the attorney doesn't charge the OP for filing again, then that would be the cheapest way to do things, but they would have to pay on the B of A cards while they waited out the 180 days, and B of A would probably file a lawsuit right away, so it really would be a nail-biting close call to get to that 180 days. I think the OP is going to have to settle with B of A unfortunately.

i think you may have a point there...however if i was OP i would see what the heck his or her atty was thinking....really now...it was their responsibility to protect their client from harms way...i don't see that happening here.

[tcreegan]

The problem tobee is explaining to the court why you are moving for dismissal....

...then BOA objects to the new filing on "bad faith" grounds.

I think that even getting dismissed and waiting the 6 months, BOA would still have a good case.

The only ray of hope I can see is not getting the news about losing the major client, which precipitates the BK, until after getting the $$ from BOA, but that is grasping at straws.


Backtoschool has it right, the costs of fighting it + the penalties of losing = take the 5K settlement offer.

Tom in Colo

[free2breathe]

Our attorney had advised we wait 6 months, and after thinking about it, I did not see the point of postponing the inevitable, so he filed for us at our instruction.

I know now, I really should have waited...but that is water under the bridge at this point.

The attorney wasn't necessarily at fault, except for not trying harder to convince you ;)

But as you say, this is water under the bridge, and I think the advice you are getting here is the best....settle and avoid additional legal fees, etc. I'm just sorry that your attorney didn't fight harder to make you see the consequences if you went ahead and filed so soon.

[tobee43]

The problem tobee is explaining to the court why you are moving for dismissal....

...then BOA objects to the new filing on "bad faith" grounds.

I think that even getting dismissed and waiting the 6 months, BOA would still have a good case.

The only ray of hope I can see is not getting the news about losing the major client, which precipitates the BK, until after getting the $$ from BOA, but that is grasping at straws.


Backtoschool has it right, the costs of fighting it + the penalties of losing = take the 5K settlement offer.

Tom in Colo

ok..tom so i worked for more defence atty's then procutory attys....your point as usual is excellent and a concern.

however, i still feel some responsiblity need go to the atty for this mess to the OP.

i also in my post suggested it may be best to settle...but they would have to hogtie me first...LOL!!!!

[tobee43]

The attorney wasn't necessarily at fault, except for not trying harder to convince you ;)

But as you say, this is water under the bridge, and I think the advice you are getting here is the best....settle and avoid additional legal fees, etc. I'm just sorry that your attorney didn't fight harder to make you see the consequences if you went ahead and filed so soon.

the question here is not whether the atty convinced the OP.....the atty should have.....if the OP's best interest was considered, simply should have been .....we cannot file yet...we need to put more time between you and the filing date....that is the way is supposed to work...really.

[free2breathe]

I agree that that is how it is supposed to work, tobee. Some attorneys would have simply refused to file. Others say, "Fine, have it your way, but you were warned." I feel bad for anyone who ends up with the latter. The former would be the attorney who would end up with the better reputation for being honest and respectable. It's too bad that in cases like this, the attorney isn't forced to bear more responsibility.

[McMark]

OK, I am thinking we need to settle also. I guess I will call our attorney tomorrow. Maybe I can see if he could negotiate a little less on it. We will have to borrow from family which sucks, but I see no other alternative at this stage. We already have a DIL in progress with the bank for the house, and it was stipulated on that we will not sign until after discharge, we can stay until then, and no foreclosure action would be started. So I think opting out and refiling at a later date would screw that all up to.

I just want it all over with...this would drive me to drinkin' if I had the cash for a beer!