preferential payment

[pa308]

A little background, I am currently giving the atty 350/mo with intentions to file in April 08 (total of 2100 includes the 299 filing fee).

As I was reviewing my bank account online I saw a check that I had paid to my mother in law in May 07 which was to pay back some money she had lent us. I guess this is a preferential payment even though at that time I was paying all creditors (I didnt stop until around November).

My question is that since on the Stmt of finacial affairs it is going to ask about whether pref pmt has been made to insider in past year should i hold off on filing until say June 1? At that point I will be able to honestly say that "in the past year we have not made an insider pref payment".

That is assuming noone sues us before then forcing us to file.

My relationship with my inlaws is excellent and i do not want to ruin that by having the trustee coming after them, I actually dont even want to tell them we are filing.

Back to the atty. Since I am paying every 15th of month up until April 15th which will be the last, should i tell him to skip a month so the last pmt to him would be May 15 then we could have our signing appointment with inteintion of filing June 1 or later? Is it an issue of having him paid off too far in advance of filing?

As I said my original intent was to make my 6 instalmments to atty, then file right away, but after reading some posts here regarding pref pmts I am wary.

Man, sometimes when i start to feel good about my case, I read something on here that keeps me up all night. I guess its a good thing but, I cant wait for this to be over....

[yoyoma51]

pa-

You'll have to put off filing. The trustee WILL ask you under oath if you owe family any money and if so, when you paid them last.

He probably won't ask when you decided to file (at least he didn't ask us), so you will probably be OK there.

[magyar123]

Was that loan by your mother-in-law paid off completely by that check in May of last year? If so it will probably not be considered a preferential payment.

[familyof7]

if you were still paying everyone it shouldnt ,matter
how much was it

[Lindsay]

I don't understand how that works. I could see if you stopped paying all creditors six months earlier and only paid the mother-in-law. But if you were paying all creditors at the time, what difference would it make? Did you ask your lawyer about this? How large was the payment?

[pa308]

mil has lent us money on and off and i usuall paid her off when i could.
I owed her 1000 and that is the check in May.

If i hold off to file til June I can honestly say that i have not made a payment to an insider over 600 withing the last year in my thought.

However in July 07 she lent me 1500 which i havent paid her back yet, that is all i owe her which i plan on paying her when the bk is over.

if i decide to hold off until june to file should i maybe tell the atty to not take the next installment of 350 towards his fee?

[CindyLou]

So basically your MIL refunded your 1000.00 plus loaned you another 500. She gave you that payment back and you have proof of that, right? If so, then I would say you have no problem.

[pa308]

Dont know that i would call it a refund as much as a new loan. So basically the 1000 i paid her in May meant i didnt owe her anthing more at that time. Then unfortuanately we borrowed 1500 in july which still owe.

[magyar123]

Dont know that i would call it a refund as much as a new loan. So basically the 1000 i paid her in May meant i didnt owe her anthing more at that time. Then unfortuanately we borrowed 1500 in july which still owe.

The $1000 that you paid in May is a closed/paid off transaction. The $1500 that she lent you in July is now an active debt. If you paid her - towards the $1500 - without paying the others - yes it would be considered a preferential payment

[emoney]

Congrations of looking ahead and following the rules as the CC do. Otherwise you and I will be eaten alive by these sharks.
regards,
emoney

[325Falcon]

Dont worry about what you paid MIl in May 07. Dont metion what you owe her now.

[magyar123]

Dont worry about what you paid MIl in May 07. Dont metion what you owe her now.

But since he has to produce bank statements the trustee would see the payments and he would have to explain, and possibly have his mother-in-law included as a creditor.

[FreshLikeADaisy]

Pa, I think you're right to wait the extra month. When you do your Form 7 (Stmt of Financial Affairs) you'll have to list it. While it would probably be pretty clear that it is not a transfer of assets (that's what the whole preferential payment inquiry is trying to uncover) in the end, it comes down to how much your trustee wants to go after. Many trustees, when they see you have no assets, leave what little you have alone; many others go by the book and question every little detail. You have no way of knowing which scenario you will face, so wait the month and list everything they ask. Me, I am NO proponent of lying on these things because if your lie is found out, what it will cost you in terms of both money and sanity far outweigh the cost to you of waiting a month and telling the truth. You'll be glad you did, I think.

[pa308]

Daisy, thanks for your input. I dont plan on lying on any of the documents. My thought is if i made the payment in May 07 and I file in June 08 then I am not lying about it. Of course if a suit pops up before then i would probably have to file at that time and I would definitely list it on my s of fa.

I totally agree with you Daisy. I cannot/will not lie on any of it as there is just too much to lose by lying. I'll just swallow whatever bitter pills come with the facts.

[Catia]

Wow pa308,
We are in same area.
$350/mo for 6 months would kill me right now. Tip my apple cart.
If this is a normal price to pay in the area--I wonder--what type of legal service does the atty provide aside from giving you docs to fill out and then he shows up and is present at the hearings--Is he providing you with any info?
I just ask cuz you're doing a lot of research. It seems you are left on your own to do a tremendous amount of research--Why is your atty not advising you about how to handle the timing and etc with the preferential transfer? Does he charge you extra? Is he helping advise you on exemptions? What is he doing other than being present? I'm not being facetious--I am seriously asking, because I am seeing a lot of people here with attornies who are not being advised--isn't that what they get paid to do???