Preferential payment question

[sofarindebt]

Spoke with attorney again tonight, he said the trustee will want the $1000 payment we paid to a friend of ours back in July, because they look at a year back, I thought it was 90 days? We don't want him getting a letter in the mail about our bankruptcy, we wanted to keep it private, but looks like that is not the case.

Anyway I have always heard/read 90 days, but my attorney has been doing this for 20 years...........hmmmm.

Any thoughts?

[HHM]

The 90 day deadline you refer to is in regards to "taking out credit" within 90 days of filing BK. Thus, if you made significant charges or took out cash advances within 90 day before filing BK, those charges are "presumed" to be fraudulent and you will have to pay them back.

Preferential payments is a whole other ball game, and I believe they can go back 2 years. (in any rate, at least one year). I don't have my BK book in front of me, so I don't recall if its 1 or 2 years.

Your attorney is probably correct.

What was the payment for?

[SinkingFast]

Preferential payments are payments in excess of $600 to Creditors within 90 days of filing AND/OR money paid to Insiders within a year of filing. Insiders are family and friends, and business associates.

Yep, your attny is right there. The Trustee will go back to your friend and get the $1K you paid him/her back for the benefit of your Creditors.

[sofarindebt]

okay he also said we could get the money back from the friend

and use it to pay living expenses..........then they will not go after him, is this correct?

then we could pay him back after the bankruptcy

[lrprn]

and use it to pay living expenses..........then they will not go after him, is this correct?

then we could pay him back after the bankruptcy

If you haven't filed already, then, yes - you can get the $1000 back from your friend and use it yourselves to pay legitimate living expenses, catch up secured loan arrears, etc. Just be careful not to pay one of your non-secured creditors more than $600 total within 90 days of filing (such as paying off a dentist or doctor bill, for example). As HHM and SF have mentioned, that would be also be considered a preferential payment and then the trustee would go after THAT money for your creditors....sigh....

You can pay anyone back you like after your bankruptcy is discharged and closed.

Sorry you are having to go through this, SFID, but far better for you to approach your friend and ask for the money back than have the trustee force it to happen legally after you file. (Btw, will your friend have the $1000 available to give back before you file?) Please keep us posted on what happens and good luck!

[9877donna]

safarindebt,Did you file Bankruptcy yet?
Keep us posted on how it goes.
And Good Luck.
Donna

[FoolAndHisMoney]

Sounds like you have a lot going on and should wait it out as long as you possibly can to avoid any problems. Time will be your best friend.

[CindyLou]

Or, could you have him give you back $401? Then you will have only paid him 599? Just a thought and less money will have to change hands.