Like most Americans, the majority of people who I help file bankruptcy have some credit card debt. And a small number have a lot of credit card debt.
As a general rule, credit card debt is among the easiest type of debt to discharge in bankruptcy.
However, once a credit card company is notified of a card holder’s bankruptcy, the credit card company will review the credit card account looking for certain activity including:
Charges for travel, vacations or luxury goods;
Charges while unemployed; and
Charges made after consulting a bankruptcy attorney.
Sometimes a credit card company or its hired gun lawyers will assert or imply that the debtor did something inappropriate in making charges or taking cash advances and therefore those transactions should survive the bankruptcy.
In my experience, when a credit card company objects, it’s usually rolling the dice and hoping to intimidate a debtor into entering a settlement agreement in which the debtor agrees to remain liable for at least a size-able portion of the credit card balance.
Just yesterday, I received a letter from Weinstein & Riley, a law firm that is really just a collection agency for the large credit card companies. Weinstein & Riley wrote that after a brief review of my client’s Chase Bank USA Visa account, it believed “that there is evidence and a sufficient basis to object to the discharge” of the debt.
How am I going to respond? Like always, I’ll advise my client of the letter and review the specific credit card charges that are at issue. If there is a problem with something my client did, I’ll negotiate the best deal possible for my client.
However, 99% of the time, my client has done nothing wrong. In those cases, I simply send back a sternly-worded letter in which I advise Weinstein & Riley or whoever that if they don’t back off, I’m prepared to defend my client to the fullest extent necessary including seeking to hold the credit card company liable for my attorney’s fees and costs.
In order to have a card holder’s charges or cash advances held non-dischargeable in bankruptcy, the credit card company would have to file and win an adversary proceeding (basically a trial) in the card holder’s bankruptcy case. Normally a credit card company has no intention of going this far. Instead, they’re just hoping to be able to bluff their way into a quick settlement.
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