Student loan, preferential payment?

[Vandervecken]

Good morning! Still ticking along, waiting on the divorce to be finalized then file chapter 13. But I have a wild question, please.

My unsecured payout will be about 22%. I have parent PLUS loans which are about half of my unsecured debt. They're included in the chapter 13 to be paid down, but not dischargable (as expected.)

My question: my employer is going to pay me a hefty bonus. It's big, but not enough to let me avoid the C13. What if I use pay most of this bonus directly to the student loans, then use the rest to float along at least 90 days before filing?

Am I committing bankruptcy fraud? Or strategic bankruptcy planning? (I know, ask my attorney, but she wants to wait until the divorce is final.)

Thanks!

[dmc-2008]

Personally, i think it is a good idea. I think you wpuld have to wait 6 months before filing then, but not sure.

Is a parent plus loan you took out for your kid?

[Vandervecken]

Yes, the loans are for my kids. My ex never contributed.

[LadyInTheRed]

As far as I know, it is not fraud to prefer a creditor over others. Even if you didn't wait 90 days, the consequence of a preference would be that the trustee could get the money back from the creditor. Keep in mind that a trustee could try get at those payments no matter how long you wait to file BK if he thinks he can prove you were insolvent at the time you made the payments.

Unless you expect to receive similar bonuses during your plan, you may want to wait longer than 90 days so that the bonus is not included in your income for the 6 month look back.

Anyone who receives a large bonus when they are planning to file BK should consult with a bankruptcy attorney about how best to spend the money. The fact that your attorney wants you to wait until your divorce is final to file BK is no reason your attorney shouldn't be able to advise you on this issue.

Are you are planning to file BK before your divorce is final against the advice of your attorney?

[Vandervecken]

Are you are planning to file BK before your divorce is final against the advice of your attorney?

Thanks LITR!

No, I'm not planning to file against my attorney's advice, just asking so I can keep from shooting myself in the foot! I didn't think about bonus' affect on the 6 month look back period, thank you VERY much for bringing it up!

Looks like I need to send an email to my attorney... another hourly charge of course, but she's worth it.

[lvmilizia]

I get a bonus every year in March and it was not included in my 6 month look back for my payments, and we filed in May, but I do have to pay the net of tax bonus into the trustee each year in March for the 5 years in addition to my normal payment.