Recently I met with a client who was looking into filing bankruptcy because of credit card and medical debt. Among his creditors, however, was an individual, an insurance company and fines due a local county. When I asked about this, he explained that about a year ago, he was involved in an auto accident that was his fault. He further explained that the individual sued him and that damages awarded were more than his insurance coverage, and that he also had fines because the accident occurred when he was under the influence.
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As we approach the Christmas holiday season, I want to remind my readers of two things. First and foremost, I want to wish all of my clients and blog readers a happy and healthy holiday season. Financial struggles will come and go but if you have your family and your health, not a whole lot of other things matter.
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Nine times out of ten, when I meet with a potential bankruptcy client, that individual will have credit card debts. In some cases, credit card debt can be startlingly large – I have seen many cases that include over $100,000 of credit card debt.
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Most bankruptcy lawyers will tell you that credit card contributes to most consumer bankruptcy case filings. Often, overwhelming credit card debt is the primary reason for a filing. For example, if you have $10,000 or more in credit card debt, and you send in only the minimum payment of 2% of the balance each month, you will need over 50 years to pay off your debt. You can run your own numbers using an on-line credit card interest calculator.
More on Recent Credit Card Use and Filing for Bankruptcy – What Are Some Guidelines?
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This morning, I received an email from a potential client who made a very bad decision that will likely keep him from filing Chapter 7 for six months to a year. Other than this one mistake, he is a clear Chapter 7 candidate:
More on Credit Card Balance Transfer Puts Chapter 7 Options in Jeopardy
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First, I think you have a very insightful blog about bankruptcy issues. I refer your blog to the bankruptcyforum.com sight to all the guest and members there. I’m just curious on your opinion to my following Bk Trip. I was working 2 full time jobs, making about 65g’s a year, I filed Bk13 (was in a no asset, unsecured cc debt/loans (unsecured) for about 65-70gs) My last cash advances were May 06 (minimal one for $500) in April 06 (big one for $4000-6000). Brief outline from the last cash advances to date of filing:
More on What Prompts a Dischargeability Objection by a Credit Card Lender?
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My friend, attorney Howard Rothbloom, recently emailed me about his victory over MBNA in a discharge complaint filed against his client. In the MBNA vs. Horrocks case, the debtor had charged over $2,400 on his MBNA credit card less than one month prior to filing Chapter 7 bankruptcy. MBNA's lawyers filed an Adversary Complaint against Mr. Horrocks alleging (1) that he committed "actual fraud" pursuant to Bankruptcy Code Section 523(a)(2) and (2) that these charges were made within the 60 day "presumption of non-dischargeability period" set out at Section 523(a)(2)(C). Howard smartly noted, however, that the Complaint filed by MBNA was lacking in detail. It contained a number of allegations, but offered no proof. Howard challenged MBNA by filing discovery materials including requests for admissions, which MBNA failed to answer. When a party fails to answer requests for admissions, those admissions are deemed "admitted." Further, Howard cited a Northern District of Georiga case which held that "actual fraud" means more than using the credit card. The creditor must present evidence showing that the debtor had actual, subjective fraudulent intent. It appears that MBNA and its counsel felt that they could win simply on the fact that the debtor used his credit card shortly before filing. And, more likely than not, if they had made the effort, they very well might have won. But Judge Bonapfel sent a message to MBNA and other creditors – creditors need to produce evidence to prove their cases. Congratulations to Howard for holding the line, especially in light of the many anti-debtor provisions of the new law.
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