Credit card lenders are fighting personal-bankruptcy losses more aggressively and successfully than ever before - and attracting criticism in the process.

Card industry officials say extraordinary measures were required to contend with the record level of bankruptcy filings and related bad debt. One indication of their success is a better-than-70% improvement over the last two years in the rate of recoveries from an anti-bankruptcy campaign mounted by Visa U.S.A.

Visa said 99% of its members are challenging bankruptcy filings. In 1989, 70% of member banks were doing nothing in this area.

But bankruptcy judges and lawyers accuse some lenders of going too far, challenging at every turn consumers' attempts to discharge their debt.

The critics say they are encountering more and more lawyers representing credit card banks in bankruptcy cases. They accuse the credit industry of mounting a heavy-handed and cynical campaign to portray filers as deadbeats and crooks out to abuse the bankruptcy system for personal gain - whereas only a small minority of cases are truly fraudulent.

"There is a presumption among creditors that either the debtor used the card fraudulently or that it would be easy to justify trying to prove the complaint," said David J. Light, managing editor of Consumer Bankuptcy News. "There doesn't seem to be much concern that the action is unwarranted,"

"What offends me is credit card lenders' actively pursuing marginal borrowers with high interest rates, then complaining when those debtors file for bankruptcy," said Norma Hammes, president of the National Association of Consumer Bankruptcy Attorneys, McLean, Va.

There are two ways to file in bankruptcy courts: Chapter 7, which absolves persons of all obligations; and Chapter 13, which involves installment payments over three to five years to repay some or all outstanding debts.

Lenders are most concerned about "losing" people to Chapter 7. In court, industry attorneys have been arguing against total dismissals of debts on grounds that they were accrued fraudulently.

Consumer bankruptcy attorneys say lenders are pressuring filers, who are usually poor, to reach settlements assuring recovery of at least some outstanding loans.

T.J. Mullin, an attorney in St. Louis who represents debtors, said that when a lender files an objection it drives up the consumer's legal costs.

"A case that should have taken just an hour and a half is going to take 10 hours of my time and it is going to increase my fee from $350 to $1,500," Mr. Mullin said. "The bank has unlimited resources and my client, who has no assets and is poor, has a choice: hire me to do the work or settle the case."

Attorneys on the lender side do not dispute Mr. Mullin's scenario.

"Some lenders make a determination that if they put enough pressure on a customer they will get a settlement," said Richardo Kilpatrick, chairman of the American Bankruptcy Institute's consumer bankruptcy committee.

But Mr. Kilpatrick said he believes the number of creditors pressing cases against consumers who are legitimate candidates for bankruptcy is small.

Visa U.S.A. is encouraging its members to be active adversaries, said Kenneth R. Crone, the association's senior vice president of issuer risk.

To control their legal costs in pursuing fraud abuse, Visa has negotiated deals with a network of attorneys nationwide. The arrangement lets banks pay for services on a contingency basis.

"I have heard of isolated cases, but I don't believe (abuse) is pervasive," Mr. Crone said.

Nevertheless, lender abuse has sparked responses from various bankruptcy court districts.

A rule adopted in August by the U.S. Bankruptcy Court for the Southern District of Florida prohibits settlements in the region unless the debtor has been represented by an attorney or has had a pretrial conference with the court, which determines whether the case needs to be litigated. The courts would then appoint an attorney to represent the debtor at no charge.

The rule ensures that lenders filing fraud accusations back them up with sufficient evidence, said Chief Judge A. Jay Cristol.

"We noticed that a number of card companies were filing suits on an unusual theory: that the debtor borrowed some money using our card, and in so doing implied that they were able to pay it back, but they didn't - and therefore they defrauded us," said Judge Cristol.

Such fraud complaints generally held up, even when not supported by evidence. And many of the debtors were poor and without legal representation, or were able to pay their attorneys only to file papers, as opposed to litigating in court.

"Many of these card companies could not have proved their cases if they litigated," said Judge Cristol.

Within the last six months, the U.S. Bankruptcy Court for the Eastern District of Michigan adopted a similar policy. Mr. Kilpatrick of the American Bankruptcy Institute, who has a private practice in Rochester Hills, Mich., said he believes Judge Cristol's initiative in Florida gained support nationally.

Judge Cristol said a group of attorneys in California called him for advice on how to address a similar situation in their district.

In Mr. Kilpatrick's district the courts require lenders' attorneys to prove their cases even if debtors do not respond to the lenders' complaints. Previously, if a debtor did not answer the complaint the court would automatically rule in favor of the lender.

In addition, under certain circumstances the Eastern District of Michigan is appointing attorneys to represent debtors pro-bono to "ensure that no one runs roughshod over them," said Mr. Kilpatrick.

Similarly, the Philadelphia Bankruptcy Bar is planning to develop a pro- bono program for people who can't afford to pay attorneys said Henry Sommer, a consumer bankruptcy attorney in Philadelphia. Mr. Sommer said the program is a direct result of the number of cases in which fraud is alleged but not proven.

AT&T Universal Card Services apparently figures prominently in such cases. Bankruptcy judges, lawyers, and others say the seventh-largest card issuer, based in Jacksonville, Fla. frequently alleges fraud in cases where there is none.

AT&T spokesman Mitch Montagna acknowledged that the card company has become more aggressive over the past year and a half. "Generally, each Chapter 7 case will get analyzed," he said.

Other lenders declined to discuss their legal strategies but do acknowledge they are more active in courts. Advanta Corp., like many credit card issuers, said it is trying to intervene at earlier stages of delinquency, through counseling or other means, to stave off bankruptcies.

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