Bankruptcy

[alan]

I am getting ready to file chapter 7 there is one certain bill I want to pay before I file. My atty said if I did that the court could go back to the creditor to get the money. If I decide to pay the bill how long should  I wait to file so the court can't go back to the creditor?

[gdtobefree]

Dh did this and did not put it in his chap 7 (no need to he closed it after he paid it).

I don't see how a trustee can take money paid to someone that was owed in the first place.

If it is done before you file then there is nothing the trustee can do.

Now if it is a large amount then I can see where they would have a hissy fit.

Someone else might come along with a better answer but as far as I know it can't be done.

DH did leave one thing out of the chap 7 and is still paying on it and has never been late in 3 yrs, Dh did this with the knowledge that if the co pulls a cr and sees the chap 7 they have the option close his account.

He took this responsibility on himself and I am not sayig to do what he did.

Message Edited by gdtobefree on 01-31-2008 07:53 PM

[granny031350]

How much is the payment to this creditor.  If a small amount, probably not worth the trustee's time.  But if larger than 600 than yes, the trustee could go after it, especially if it was a creditor like a credit card.  Now you could pay it off and not list it however if the trustee asks for your bank statements or credit card statements etc then you might get accused of fraud.  Be careful here.

[alan]

Its for $2400.   If I paid it out now how far back can the trustee collect on it? I could possibly wait 90 days to file after its paid off?

[alan]

oh yeah its not a card card its a cash reserve tied to my checking acct.

[granny031350]

so is it with a bank? or a credit union?  If you want to maintain your relationship with this bank, then reaffirm it as a part of your BK.  Let the higher ups know what is going on and what to expect.

[BlackandBlue]

WHAT ARE PREFERENTIAL PAYMENTS?

The Bankruptcy Code provides that certain payments made just prior to filing a bankruptcy case may be preferential payments. Preferential payments are defined as payments made to a creditor that allow the creditor to receive substantially greater payment at the expense of other creditors in the case. A trustee in a bankruptcy case may avoid or seek return of payments made that prefer one creditor at the expense of other creditors. This often arises in cases where individuals pay off one debt while not making payments on their other debts. It also arises commonly when individuals pay back loans to friends or family members shortly before filing bankruptcy.

Generally speaking, payments of $600.00 or more to an unsecured creditor made within 90 days of a bankruptcy filing is a preferential payment. Also, repayment of debt to a family member within 12 months of a bankruptcy is a preferential payment.

[alan]

How would they know if you are paying a family member back? Especially if you used cash?

[rizeninme]

When we did our BK, part of the process for the courts was a VERY detailed budget plan- they literally needed to see where every dollar we made was being spent in order to show that we really did need to file for BK.

So, I guess technically they would not know if you were making cash payments to pay back a family member, but as far as the paperwork goes, you will have to account for all your income, so that would be hard to hide. Over the years, I have seen many people who's BK's were dismissed because the courts find them to be untruthful about their income (the court actually sends a letter stating that to the creditor so they know they can start billing/collecting money from their customer again), so I strongly recommend you to be very careful, and very honest. Once you go to court, then your life will get back to normal, and you can resume making payments to whomever you want. But right now, your whole financial life is under a magnifying glass.

Just remember, this is one of the reason's you are paying an attorney- he/she can help you make these decisions and advise you legally on what the best thing for you is. Make them earn their keep!!!