Paying Relatives

[mountanddo]

My bankrupcy information states that I can't pay any relatives if I owe them money and I need to report that. Last year I borrowed $1500 from my daughter because I was unemployed and needed to move. Am I ever going to be able to make payments to her before my bankrupcy is discharged? The last thing I want to do is tell her I can't pay her any money for 3 years.

[AngelinaCat]

I am not sure of the situation with a Ch13, but in a Ch7, if you pay back any person $600 or more in a one year period, that is considered a 'Preferential Payment'. If that person also happens to be a family member, friend, or business partner, then it is an 'Insider Preferential Payment', and the trustee can and will go after that person to 'Avoid the Transfer' and get that money to pay your creditors.

If you have an attorney, please discuss this situation very carefully with that person. You may be able to include your daughter as a Creditor in your Plan, but again, I am not a Ch13 person.

[momofthree]

You can list her as a creditor in your petition and she'll be paid at the same rate as the rest of your unsecured creditors. You'll probably have to show proof that you borrowed the money.

You can also pay her "on the side" out of your living expenses. For example, if you budget $500/mo for food & clothing and only spend $400, then you can spend that extra $100 any way you want--including paying your daughter back.

[AngelinaCat]

Thanks, momofthree. I was thinking along those lines, but was not sure.

[mountanddo]

Well I talked to her and she is ok with me putting it in the chapter 13. Since my payment is so low she probably will get less than $20/month and I can just pay the remaining to her because it won't pay it all off. I deposited the money in my account last year and she has a copy of the check so I'm hoping that will be proof enough. I also have a couple of bill pay records of me paying her back $100. I'm not sure if they pay the creditors a percentage or if they distribute it equally among everyone. Will I be able to know what the trustee is paying each creditor each month? I just didn't want to have to pay her back over 3 years but since I do owe her the money I might as well include it.

[AngelinaCat]

I am very pleased that you have a kind, understanding daughter. In our situation we had borrowed about 2K from my husband's first daughter (by a prior marriage) and her husband. We had been making payments back until we got it down to about $1,500. Then in August 2007 before we filed in December 2007, *Tina* the daughter, made some snarky remark about us being deadbeats or something of the sort, and I got p'oed enough to tell 'Hub: "pay off everything we owe to those two, we will never, EVER, bother them again!!!!"

Which we did.

HOWEVER, our useless attorney had NOT educated us about 'Preferential Insider Payments', so we got penalized for that payment, and got to pay the trustee that same amount out of our year Retirement stipend amount, to keep him from going after DD and SIL, because whatever familial relationship between daughter and father would have been *cooked*, and we were trying to at least stay cordial.

In retrospect, we probably should have let the trustee go after them and 'Avoid The Transfer'. We have almost no contact with them at all....

[mountanddo]

Well you make all sorts of promises when you borrow money all with good intentions. Of course then "life" happens and all those good intentions go out the door.

Our relationship really isn't that great. In fact, we didn't speak to each other for a few years due to other problems. She has been snarky in her own way. Her husband graduated from Harvard and makes quite a bit of money working for a top consulting firm. She is working on Phd and lives in California so she takes all opportunity to point out how successful they are. Of course I had nothing to do with that, I'm just her mother, LOL. 3 years, month after month is a long time to be reminded how much of a loser your mother is. But I have no options as I just don't make enough money to try and pay this off on the side. Hopefully the 3 years goes quickly.

[jange]

I included 2 family members in my plan. It was not questioned by the trustee. While my plan will not pay them in full, I will once I get a little closer to the end and have enough saved.


20 payments made

[keepsmiling]

Well you make all sorts of promises when you borrow money all with good intentions. Of course then "life" happens and all those good intentions go out the door.

Our relationship really isn't that great. In fact, we didn't speak to each other for a few years due to other problems. She has been snarky in her own way. Her husband graduated from Harvard and makes quite a bit of money working for a top consulting firm. She is working on Phd and lives in California so she takes all opportunity to point out how successful they are. Of course I had nothing to do with that, I'm just her mother, LOL. 3 years, month after month is a long time to be reminded how much of a loser your mother is. But I have no options as I just don't make enough money to try and pay this off on the side. Hopefully the 3 years goes quickly.

I truly only wish your daughter the best.
But, as she may sadly learn one day, there are plenty of folks here who had great jobs, including some doctors, lawyers and consultants.
It's a guarantee of nothing nowadays.

[mountanddo]

I included 2 family members in my plan. It was not questioned by the trustee. While my plan will not pay them in full, I will once I get a little closer to the end and have enough saved.


20 payments made

Thanks for the info jange. I plan to do that as well. They come to MN once a year for Xmas so I'll just put the cash in an envelope and give it to her then so I'm not spending money to get money orders.

I went to get money orders to pay for the attorney at TCF bank where I have an account. I was quite shocked to find out they charge $5.00/ea. Luckily the teller told me that Cub foods which is where the branch is, is cheaper. They cost me .79/ea. Nice to know that the banking system is out to gouge people even if they have accounts with them.