Trying to figure out when to file

[karibaa]

I owe my Dad $1500 which I borrowed this month and want to pay back in September. If I take this out of my checking account in cash over a few days will it be questioned if I file Chapter 13 in the next couple months? I'm not sure when I'm going to file, but I stopped paying my credit cards a little over a month ago because I can't afford payments anymore. I should clarify the money I borrowed was used to make and sell food for profit. This backfired, as after I pay for my help and my supplies I am left with nothing.

[dmc-2008]

Take it out of what?

[justbroke]

karibaa please don't try to figure out how to "hide" this from your bankruptcy. A Chapter 13 is actually VERY forgiving when it comes to recently paid "unsecured" creditors. The fact is that your father is an unsecured creditors. When an unsecured creditor is preferred over other unsecured creditors it is called a preference. Technically preferences can be recovered on behalf of the other creditors and then shared among them. This does not (typically) happen in a Chapter 13 unless it's a serious amount of money; $1,500 is not a "serious" amount of money.

Just as an example (only), say you have $2,000 in the bank at the time you file and you are unable to "exempt" the money. Remember, a Chapter 13 is very forgiving. A Chapter 13 would only require that you pay the unsecured creditors "at least" how much money they would have received if you filed a Chapter 7. In this case, this would mean that if you could not "exempt" the $2,000, they would have received $2,000 (minimum). In the Chapter 13, you would need to pay the unsecured creditors at least $2,000 over the life of the Chapter 13. To this extent, Chapter 13s are much more flexible and if you're in a 5 year plan, that means you must pay $2,000 over 5 years. Here's the kicker... it's not necessarily an "additional" $2,000 you have to pay. If your "disposable monthly income" (DMI) is calculated at $50/month for 5 years, then you would pay the unsecured creditors some $3,000 over the 5 years (60 months). You would pay no more.

Of course, please disclose this unsecured loan to your attorney and they will guide you through how this process works.

(Please note that I did not take into consideration the organization of your business and assumed it's a sole proprietorship for purposes of illustration. If it was of a different form, my response could vary.)