Ch. 7 - Trustee demanding repayment

[Anonymous]

Hello,

Filed for Ch. 7 in April. I had a family member loan me money over a year ago, I was making making payments to them while also paying on all my debts. Paid off my father while still making payments on time to my other creditors. Fast forward this year and I filed for Ch, 7 for over 42k worth of debt. I never hid any of that and even reported it since I believe it was the right thing to do. I get that I owed all the debt and feel bad I had to file. It got so bad I could not afford food or rent with all my repayments taking more than my paychecks I was earning. No excuses, just dealing with the fact.

I just recieved word that the trustee wants me to pay back all that I had repaid my father for the loan. 7/31 was the date I was given in my bankruptcy paperwork from the court as the last day any of my creditors could petition. I was looking forward to being discharged the 8/1. I have agreed to repay that debt so they would not go after my father (who just had a stroke) plus it's my issue, not his.

The trustee demands the repayment by 8/25. I cannot get a straight answer from my lawyer, will this new repayment lengthen the time until I am discharged? Nothing in the letter from the trustte says anything else about dates other than when I have to pay him. Has anyone had any experience with this?

Sorry if I am all over the place, just stressing over this since I cannot find a clear answer. Thank you in advance for any and all help you can provide.

[despritfreya]

1. You did nothing wrong by paying your father and, but for the bankruptcy, there is no issue.

2. Under bankruptcy law, a Trustee can recover certain payments made to creditors within the 90 days prior to filing. The 90 days is extended to 1 year if the creditor was an "insider". Your father is an "insider". Recovery is based upon preferring one creditor over another. It is called a "preference".  See II USC 547

3. There are defenses to the recovery of a preference such as the payment being made in the ordinary course. However, the cost of litigating such a defense (suit would be against your father) tends to make raising the defense difficult in small consumer type cases.

4. You are protecting your father from the Trustee by agreeing to repay the bankruptcy estate the amount you paid to him over the 1 year prior to filing.

5. Settling with the Trustee does not delay the entry of a Discharge unless the Trustee files a Motion or Stipulation to Extend the deadline to file a complaint under 11 USC 727. This Motion/Stipulation would have to be filed on or before the deadline for the filing of a complaint, (July 31, 2017 as referenced in your post). If you have agreed to settle with the Trustee it is highly unlikely that he will seek such an extension.

Stop panicking. It sounds like you are doing the right thing and you will be fine.

Des.

[Anonymous]

Thank you so much Des for your prompt reply. I apprecaite the feedback!

[Anonymous]

I had something similar happen to me. I bought a car from my niece a year ago and through monthly payments paid her a total of $3700. The trustee slapped a preference on it. I was able to deal with the trustee through my lawyer and ended up paying $1850 but like you I couldn't leave that burden to my niece. It did not extend my discharge date and I paid it about a week after discharge.

[Anonymous]

Thank you! Sounds like no matter the reason, a car or school expenses, if it is anyone in your family, the trustee will always ping you on it. Good to know.

I'm hoping the discharge goes through, one more week!