credit status after payment recovery

[possumfat]

Trustee has recovered a pref. payment made to wifes credit card from my chapter 7 case................credit card company agreed to a figure and will be sending the trustee the funds for disbursement and from there looks like my case will be closed. The question I have (filed myself without spouse) will this affect my spouses credit ? We assume the credit card company will come back to her to recover the amount the trustee took............but not sure at this point. Any experience or opinions about this situation ? I was an authorized user on her account if that is important..............her account was not listed on my BK forms. Thanks in advance.

[lrprn]

Trustee has recovered a pref. payment made to wifes credit card from my chapter 7 case................credit card company agreed to a figure and will be sending the trustee the funds for disbursement and from there looks like my case will be closed. The question I have (filed myself without spouse) will this affect my spouses credit ? We assume the credit card company will come back to her to recover the amount the trustee took............but not sure at this point. Any experience or opinions about this situation ? I was an authorized user on her account if that is important..............her account was not listed on my BK forms. Thanks in advance.

Am trying to understand why a payment to your wife's credit card was considered a preferential payment by you when you filed alone without her. Authorized users are not responsible for the amount owed on the card - the cardholder, your wife, is. Are you sure you weren't a co-signer on the card rather than an authorized user?

If you didn't list the cc on your creditor list - how did the trustee find out about it in the first place? Did you file with a lawyer or on your own (pro se)? If you filed with a lawyer, what did he/she say about this? How did the trustee justify taking back a payment to a credit card that as an authorized user, you aren't responsible for paying and didn't list on your list of creditors?

(And, yes, your wife will be responsible for paying the cc what the trustee took back.)

[HHM]

As for how the trustee found out about it, the check or transfer was probably on a bank statement.

lrprn...this situation is clearly a preferential payment...preferential payment is about the "asset" (the money that was paid to the creditor) and not about the creditor. But for the payment to his wife's credit card, this cash would have been an asset of the BK estate. My guess is, it was made relatively close to the time when this gentleman filed BK and the payment was relatively significant. The trustee may have even argued that it was an "insider" transfer because his spouse benefited from the payment.

In any event, I don't think it will affect her credit so long as she makes the payments...but the balance will likely be put back on the card.

[lrprn]

As for how the trustee found out about it, the check or transfer was probably on a bank statement.

lrprn...this situation is clearly a preferential payment...preferential payment is about the "asset" (the money that was paid to the creditor) and not about the creditor. But for the payment to his wife's credit card, this cash would have been an asset of the BK estate. My guess is, it was made relatively close to the time when this gentleman filed BK and the payment was relatively significant. The trustee may have even argued that it was an "insider" transfer because his spouse benefited from the payment.

In any event, I don't think it will affect her credit so long as she makes the payments...but the balance will likely be put back on the card.

Thanks for explaining this so clearly, HHM - appreciate it and I'm sure possumfat does too!

[pussumfat]

I do appreciate the explanation...................payment was made within the 90 day period before filing...............filed with a lawyer (a whole other subject) that basically gave me bad advice.

You say it should not affect her credit which would be excellent.........do you think it would be wise to see if somehow we pay the trustee the money before the actual transaction happens with the credit card company to eliminate the transaction and any type of possible negative affect on her credit ?

We could get a loan for the money if required..............or do you think this would stir the trustee up since we are close to maybe having the case closed and finished ? Been over a year now.

[HHM]

First, your not allowed to take any loans or use any credit while your BK is pending (i.e. prior to discharge). And yes, it probably would raise red flags all over your case if you offered to pay the trustee the money.

Honestly, it shouldn't affect her credit in any meaningful way. She is not the one filing BK, presumably she hasn't been late on any payments and can make the minimum payments, and will continue to do so, (essentially, this is a no harm, no foul...so long as you continue to at least pay the minimums).

[CindyLou]

Yes, but as stated earler by the OP, if that balance is put back on the card it will result in it being way over the limit. This could cause some issues. And as far as a loan goes, your wife can take out a loan at any time, but you can't. I would contact the credit card co. and see how they plan on handling the situation. I think the unknown is what is killing you right now.

[HHM]

Yes, but as stated earler by the OP, if that balance is put back on the card it will result in it being way over the limit. This could cause some issues. And as far as a loan goes, your wife can take out a loan at any time, but you can't. I would contact the credit card co. and see how they plan on handling the situation. I think the unknown is what is killing you right now.

Where was it said that putting the balance back on the card would put the wife over the limit?

[possumfat]

the info cindy refers to is from a previous post.......putting the amount back on the card would exceed its limits.............also case has been discharged.

maybe the best thing to do is contact the card co. and see how they deal with the situation.............or (since you know the case has been discharged but not closed) would it still be ok to get the loan and somehow pay the trustee ?