FIGHT BACK AGAINST CREDITOR ABUSE
Has Your Creditor Filed an Adversary Proceeding Against
Are You Being Accused of Committing Fraud?
Is your Bankruptcy Case being Challenged by a Creditor?
Hire a Bankruptcy Attorney with Experience Successfully
Defending these proceedings and getting them dismissed.
One of the less welcome developments in bankruptcy
proceedings, has been the increasing aggressiveness of credit card companies
in filing adversary proceedings under 11 U.S.C. §523(a)(2)(A) in bankruptcy
court to try to prevent the debtor from discharging an individual debt.
These cases are overall still relatively rare, but they are increasingly
being filed by creditors.
An adversary proceeding is a lawsuit in bankruptcy court
by a creditor against a debtor who has
filed for bankruptcy. The lawsuit is started when the creditor files a summons and a
complaint. Generally, when a credit card company files a lawsuit in the bankruptcy court
they allege that the debtor defrauded the credit card company by using his
credit card without intending to repay that debt. Under bankruptcy law, only
a good faith debtor who used his credit cards with an intent to repay his
debts but who is financially unable to pay them, is entitled to a
How do credit card companies know that the debtor
did not intend to repay the credit card debt when he used his credit
The answer is that they generally don't know, but they
file these lawsuits anyway, because they know that debtors, especially
debtors who are not represented by an attorney, cannot afford to fight these
lawsuits, and so the debtor usually agrees to settle these lawsuits by
agreeing to pay back these debts after the bankruptcy. Not having an
attorney can cost you a lot of money if you are sued. My review of court
records indicates that unfortunately, almost all of these cases are settled
by debtors. My advice: Get a lawyer and fight back.
How can a creditor prove that a debtor used his
credit cards without intending to repay them?
The first answer to this question is that there is a
presumption that certain charges within several months of your bankruptcy
filing were charged with an intent to defraud the credit card company. Your
lawyer should therefore make sure that you do not file for bankruptcy until
this time period from the date that you last used your credit cards has passed
before filing for bankruptcy, in order
to protect you from this type of bankruptcy challenge. Credit card companies
are also occasionally successful in these lawsuits if they can show that the
debtor suddenly changed his spending habits and maxed out his credit cards on a luxury vacation or on luxury
items shortly before filing for bankruptcy.
What other factors do courts look for in determining
whether a debtor used his credit cards without intending to pay them, and
therefore is not entitled to the bankruptcy discharge?
1) The length of time between the
charges and the filing of bankruptcy;
2) Whether an attorney has been
consulted concerning the filing of bankruptcy before the charges were made;
3) The number of charges;
4) The amount of the charges;
5) The financial condition of the debtor
when charges were made:
6) Whether the charges exceeded the
credit limit of the account;
7) Whether there were multiple charges
on the same day;
8) Whether the debtor was employed;
9) The financial sophistication of the
10) Whether the debtor’s spending habits
11) Whether the purchases were made for
luxuries or necessities.
What must the credit card company prove to the court
to prevent the debtor from receiving the bankruptcy discharge?
The burden is on the plaintiff to
establish each of the following elements of fraud (using credit cards
without intending to repay them) by a preponderance of the evidence. To win
this cause of action under section 11 U.S.C. §523(a)(2)(A), a creditor
must establish the following:
(i) The debtor made a false
(ii) At the time the representation was
made, the debtor knew it was false;
(iii) The debtor made the representation
with intention of deceiving the creditor;
(iv) The creditor sustained loss or
damage as the proximate consequence of the false, material
How can an attorney help you in fighting these
Your lawyer should review your situation thoroughly before
filing for bankruptcy to help you avoid these situations. However, if you
are sued in bankruptcy court by a credit card company that is challenging the
dischargeability of a credit card account, you will need an attorney to
fight for you.
I take a "No Settlement Policy" toward these cases, and I
fight these cases aggressively by doing the following:
1. Filing counterclaims against the credit card company
2. Filing counterclaims against the credit card company
for attorney fees that can be awarded to the debtor, if the debtor wins the
3. Aggressively using discovery demands to obtain
necessary information to defend against the claim.
4. Filing motions before the court to have the
credit card company's complaint dismissed.
The key to winning these cases is to fight these cases
aggressively. I generally demand that the credit card company
discontinue their lawsuit immediately because I will not settle these
frivolous lawsuits under any circumstances. I further notify the creditor that my client will fight the case through trial, and that my client will seek
costs and attorney fees from the credit card company. I believe that if I settle these cases
easily by giving the credit card company money to settle these lawsuits,
that I invite them to bring more of these frivolous cases against my
clients. The better approach is to let the credit card company know that
they are going to have to spend more in attorney fees pursuing this lawsuit than
their whole frivolous lawsuit is worth, and that you will be suing them in court
for costs and attorney fees.
Jacob Silver, Attorney At Law
- Office Address
- 1225 Franklin Avenue Suite - 325
Garden City, NY 11530
- (516) 374-1452
- (718) 797-4141
- Electronic mail
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