Credit card firm’s suit bounced from New Hampshire bankruptcy court

When a consumer gets sued by a credit card company, the result is a forgone conclusion, right?

Not so fast. The pleadings filed by big finance companies may fall short of what is required to bring a successful suit. The pleadings are often concocted by low level functionary’s in far flung locations, and may actually be so deficient that the bank or card company cannot prevail in court.

That is exactly what happened in a recent New Hampshire bankruptcy court case. FIA Card Services sued the debtors, who had filed a Chapter 7 bankruptcy case in New Hampshire; they alleged that the debtors incurred approximately $12,000 in charges and balance transfers on their card without any intention to pay, and sought to prevent the debtors form getting a bankruptcy discharge on that card.

But an examination of FIA’s pleadings did not reveal any indication of how they were going to prove that the debtors never intended to pay the debt at all. Sure, the charges were there, and the debtor’s schedules listed almost no current income. But under new pleading standards announced last year in a United States Supreme Court case, FIA’s complaint was insufficient to prove every element of their case, which includes proof that the debtors never intended to pay this particular debt at all. FIA’s lawsuit was dismissed by the bankruptcy judge.

For anyone tangling with a credit card company in court, or contemplating bankruptcy to eliminate credit card debts, should take this decision to heart. The message from this case is that documents and pleadings served on you by even the biggest credit organizations should be scrutinized carefully and not neccessarily taken at face value. Debtors willing to question authority may be pleasantly surprised at the results.

The New Hampshire case is In re Karagianis, and you can read it here.


By Doug Beaton

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