cancel
Showing results for 
Search instead for 
Did you mean: 

Paid $9,400 too much to a creditor in 90 days prior to filing

tag
twono
Frequent Contributor

Paid $9,400 too much to a creditor in 90 days prior to filing

Attorney emailed me asking me to explain a few payments to a single creditor that was just inside the 90 day mark of 'not supposed to make payments totalling more than $600 within 90 days of filing'.

 

My attorney/trustee realize i was BT'ing debt, juggling debt, borrowing debt to pay debt, etc....so those payments were just part of the cyclonic debt trap i was in.

 

So an amendment to my 'Financial Affairs' sceduale was sent to me, signed it and returned.  It still hasn't been reflected on my PACER acct.

 

Research (NOLO) tells me that there will be NO ill effect to my BK case, but i'm sure the trustee will 'claw back' that money and distribute to all creditors....or pay it straight to my back taxes which would be great....I guess.

 

Also, trustee wanted to know mileage and condition of 2 vehicles that i'm surrendering.  So i guess things are moving forward in a positive way.  I'm about 3 wks out from DC, and i definitely feel the stress growing.  

Message 1 of 3
2 REPLIES 2
FireMedic1
Community Leader
Mega Contributor

Re: Paid $9,400 too much to a creditor in 90 days prior to filing

If the court determines that you made a preferential debt payment prior to filing your case, the trustee can avoid that payment and get the money back for the benefit of all your creditors. This is commonly referred to as a clawback. Keep in mind that preferential payments are not illegal unless you made them with the intent to defraud your creditors or hide money from the trustee. But the recipient of the payment will still have to return the money.

https://www.alllaw.com/articles/nolo/bankruptcy/preferential-debt-payments.html


Message 2 of 3
twono
Frequent Contributor

Re: Paid $9,400 too much to a creditor in 90 days prior to filing

The kicker is, the payments were made on  day 88 and 89 of the 90 day limit...

 

Since i owe back taxes and, i will assume the trustee will clawback that money and pay the taxes.   Which is fine by me.

Message 3 of 3
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.