contemporaneous exchange

[kristyf]

[fltoo]

Wondering why you are asking this and how it affects your BK.

In plain terms, let's say that I sold you 1000. worth of clothes and I gave you 20 days to pay for it. You pay me for the clothes in 20 days then file BK.

The trustee cannot consider this a preferential payment because it is a
"cont exchange" and cannot go after me to give back the money you gave me.

[StartingOver08]

If you are thinking to use this to exclude the payment to your mother - I would not chance it. Certainly check with your attorney, but these Trustees are not going to excuse $3000 - end of story.

To illustrate the Trustee's attitude: When I was waiting for my 341...my attorney was chatting with another BK attorney. They were discussing how the Trustee had recently required a grandmother to give up her house she owned free and clear for more than 50 years because her grandson had filed BK and she had added him to the deed several years prior to make the transition easier in the case of her passing. So, as a direct result of the grandson filing BK, the grandmother lost her home. The Trustee is not there to be FAIR. They are there to find $$$. They get paid on commission. (In our are 10% of the value of the asset goes to the Trustee).

Don't play with the Trustee.

[kristyf]

well, to be honest, i wouldn't be playing with the trustee. i owe my mother for the appliances as well, which were $3000. if i say I paid her for the appliances, rather than the other money I owed her, then it would be cont exchange, since i paid her within 30 days.

but... i DO need to talk with an attorney. as to when and how.. guess that's next on the list. also, i'm sure he has experience with the u.s. trustee here so i will talk to him about that as well. i'm sorry to hear about that grandmother! that's AWFUL.

[keepmine]

Contemporaneous exchange means, when you transfer something that is not exempt prior to filing and replace it with something of equal value that is also nonexempt.
The applicances just won't wash. They are not the equivalent of the cash you used to reimburse your mother.
To anticipate your next argument-applicances depreciate rapidly. The trustee could not sell them for the amount you paid your mother.

[TEW]

Why not wait until after your BK then pay your mother back. You can say what ever you want as long as it's the truth.
let us know what your lawyer tells you.

[kristyf]

well poodoo. you guys are just too smart. i'm *really* glad I found this forum, though!

I will certainly NOT pay my mom anything more until after discharge!

I'll let ya'll know what the lawyer says. Thanks so much for keeping me in line!

[StartingOver08]

We would rather tell you the way it is then have you go to the 341 and find out that your entire case is dismissed! The Trustees' do not do what we consider logical. So its better you know the "rules" before you file so you can plan out your options early.

Believe me, it has been a learning experience for all of us! We are just trying to keep you from making a mistake that is too costly to you.

[fltoo]

I have honestly only heard of a cont exchange being a defense for a business creditor when a trustee wants to avoid a debtor payment.

In the example of the clothes, I sell you clothes for your retail business and allow you time to pay in the course of doing business. Your payment cannot be avoided by the trustee because you are paying me for the clothes.

That scenario fit my situation, so I did not research any further.

I will check and see if there is any case law regarding non business. I think it is a long shot.

[kristyf]

so if i bought a car from my brother, and he gave me 30 days to pay it, and i paid him, they would take that money back from my brother?

just trying to understand the trustees.

[StartingOver08]

so if i bought a car from my brother, and he gave me 30 days to pay it, and i paid him, they would take that money back from my brother?

They probably would undo the transaction, take the money and the car! LOL. The Trustee really examines insider transactions - and anything having to do with family is considered an insider.

just trying to understand the trustees.

Don't use logic...

[hereforinfo]

The fact is, you paid your mother back money that you borrowed, right? If you try and get around it or play the system, you're going to get burned.

[fltoo]

Not only would I not claim cont exchange if it truly was not as in the course of doing business, but your mother or brother would have to hire a lawyer to defend the cont exchange.

Doubt if any lawyer would put his license on the line for this defense if it was not a cut and dry cont exchange for business purposes.
This was meant to protect creditors that have a valid claim on the money paid for payment of goods.

[kristyf]

okay, okay, i give up.

[keepmine]

Not only would I not claim cont exchange if it truly was not as in the course of doing business, but your mother or brother would have to hire a lawyer to defend the cont exchange.

Doubt if any lawyer would put his license on the line for this defense if it was not a cut and dry cont exchange for business purposes.
This was meant to protect creditors that have a valid claim on the money paid for payment of goods.

I'd agree.
At the end of the day, don't involve family and friends if you're on the cusp of bk. The preference issue is just something where there is no workaround.