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Termyn8or -> RE: Lawyer, Refuses To Pay Bank Of America Credit Card, Threatens To Sue (1/7/2010 12:36:54 AM)
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We have Chapter 7 here. It is alot harder to get after the changes made during the Bush regime, but it is still there. Very few qualify for it now. I doubt this guy will unless he defers a hell of alot of income which is illegal. Actually the old Chapter 7 was used tactfully by quite a few people as a ploy. The actually made money off of it. A Chapter 7 was a full discharge bankruptcy. This was a total estoppment on any collection activities by any lenders. There were also exemptions, and some people knew how to use them.
For one, this was federal "law" but adminstered by the states. Though it was in a federal court they were bound by state law. Many people used to amass fortunes, and move to Florida for the minimum required time to prove residency, and file, and have their personal home exempted. Florida had just about no limits on it. So people would take all the money that they wanted to keep in the US and build mansions, literally. Those mansions, once the principal primary residence of the filer was exempt. You also got to keep one car. Suggested makes were DeLorean, Mazerati, Rolls Royce and so forth. The system was prone to abuse and indeed was abused. People made alot of money doing it and some did it every 7 years whether they needed to or not.
Chapters 11 and 13 were reorganizations, which seem quite similar to this "under administration" or whatever they have over there. One was for companies and one was for individuals. While not a discharge bankruptcy, it did have a court administered plan for repayment. This would reduce interest, reverse late fees and such and get you back on track, if you have the income. Under these conditions the default gets worse. Everything goes up for grabs.
But under the highly coveted Chapter 7 you also had the option to reaffirm debts. For example they can't collect from you, but they can still foreclose on everything but your primary residence. If you wanted to keep a second house you could make a deal. And reaffirmment was attractive. That means you could file a Chapter 7 and still have good credit with one lender for decades. No matter what, they could never foreclose on the primary residence unless they can prove fraud.
Things have changed. They'll give you a Chapter 11 or 13, but to get that Chapter 7 there are very stiff requirements. Most are based on the ability to pay under the new laws, as under the old, but the whole thing is scrutinized much more thoroughly. They are now looking for fraud, possibly because of past experience, and the law's favor with the banks.
So I might wonder if this guy is just a jerk, or some evil genius. Very possibly there are things he knows that I don't know. While I doubt it, at least in theory, I can't dismiss it as a possibility. It still doesn't matter, with a decent sustainable income there should be no reason to go bankrupt. A good credit rating is an asset, and should be treated as such, especially now. I mean in the end there might be only a few of us actually paying the bills. If we can foot it, we would have pretty much anything we want. Indeed I could buy a new car on a credit card, and not even soak up all my credit. With the real estate crunch I have been considering going deep to get a viable income property. But as things are now, it is hard to rent a $400 per month apartment even in a fairly nice neighborhood. That means I would have to sustain it until the market changes a bit, and noone knows exactly when that will happen.
But the fact is, those of us left with actually good long term credit will have leverage over most.
If I ever have to vie for a real Chapter 7 I would have to grin and bear it for a time. If I had done it ten years ago I would be in good shape. But then would I ? It didn't happen so we will never know.
This guy might have something in mind, to make case law. If he can force via Chapter whatever, the abatement of default rates and penalties, he might be onto something, but sending them that notice would be counterproductive. In any Chapter, refusal to pay is not grounds.
Now if this lawyer gets this off in any way, there will probably be a challenge. When you file ALL creditors are welcome to show up and get a piece of the pie. But if he wins he establishes a precedent.
In that case, the only place you will read about it is in alternative news sources or in the actual court transcript.
T
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