Very Recent Best Buy Computer Purchase

[jktrading]

The thing is our attorney warned us VERY sternly against entering into any side agreements or making any side payments to a creditor while the BK process was working. She said that to do so would cause us to run the risk of having our BK dismissed. She did not go into any details, and we we were too dumb to ask, but from reading other posts here, I think that if the trustee gets wind of these side arrangements, they could be viewed as 'preferrential payments.' That is, you are favoring one creditor over all the others, and it is not allowed.

I see what you are saying about preferential payments. It looks like AlreadyFiled actually worked this through his attorney's office. I have read here where others have done the same.

I wonder why my attorney would say to treat it like unsecured debt, and someone else's would say to re-affirm? Mine was admitted to the California state bar in 1976 and has a specialty degree/license with them for Bankruptcy. All the other attorney's in my area did not have this extra certification, even though they do BK's for a living.

Could he know more than some of these others because of the time he's been an attorney, and his specialty? I gave him a copy of the security agreement with Best Buy and Circuit City, and he said he was treating it as unsecured and to not worry about it.

To me, at this point, I think Best Buy is just finding a way to convince people to re-affirm, or pay a "settlement" with their wording in the contract. I may be wrong, but think they are nothing more than a glorified unsecured creditor, even though they state they have this "security interest."

Again, I could be wrong, but have not heard anything about anyone being called into court about this "secured" type of debt. Please, if anyone disagrees, or has had a court experience with this type of credit, chime in. I'm only going by what I've heard and experienced up to this point. And yes, I am severly knocking on wood because I'm not quite done with my BK. I had my 341 in late December and am waiting for February 27 to hurry up and get here.

[ansky0007]

Since it was purchased less than 30 days prior to filing I would return it and then there would be no issue of fraud, etc.

Buying something at $1500 within 30 days of filing will easily fit into the presumption of abuse and they can have the debt excluded but more importantly if viewed as fraud could put your whole BK at risk.

I think your lawyer was not paying attention or just did not care since he already received his fee's upfront.

[2Bshinyandnew]

The thing is our attorney warned us VERY sternly against entering into any side agreements or making any side payments to a creditor while the BK process was working. She said that to do so would cause us to run the risk of having our BK dismissed. She did not go into any details, and we we were too dumb to ask, but from reading other posts here, I think that if the trustee gets wind of these side arrangements, they could be viewed as 'preferrential payments.' That is, you are favoring one creditor over all the others, and it is not allowed.

First off, IMO, I am surprised the OP attorney was not concerned about the purchase to begin with, unless the attorney advised from the get-go that the purchase may be non-dischargeable.

A reaffirmation agreement done through your attorney, or even on your own if you're pro-se is not the same as a "side arrangement". I'm pretty sure that as long as you list everything on your petition, you "can" reaffirm a secured debt or a "security interest debt" like Best Buy or Circuit City if you chose. That is not the same as a side arrangement. Whether you should or shouldn't is up to the debtor and should not affect your discharge. Now, me? If I owed Best Buy $1000 for a computer I purchased with their card less than 90 days before filing, I personally would only reaffirm if the terms were too good to pass up or the trustee said I had to. Otherwise, I would call Best Buys bluff and take a chance that they would actually come and get the computer. But, that's me

I don't think "preferential payments" pre filing are a problem for the debtor, any insider payments that are made pre petition can be "undone" by the trustee who will get the payment back from the creditor it was paid to and redistribute it fairly among all the creditors. This doesn't really affect the debtor, except in the personal sense, where, say that payment was made to your mom, or a relative, and they get pulled your into your financial ickiness, which is upsetting for all involved. If you paid a corporate creditor, it won't affect you at all. I don't think you will have your BK petition dismissed because you sent $1000 to Best Buy or even your parents just before you filed. See quote below re: Denial of Discharge and Preferential Payments.

From this website: http://www.moranlaw.net/preferences.htm

"It is neither wrong (under California law) of the debtor to make a preferential payment nor wrong of a creditor to accept it . The preference statutes are simply an attempt to achieve equity between creditors. Creditors are almost always better off attempting to get payment of their claims from their debtors and dealing with any efforts to recover the money when, and if, such attempts are made in bankruptcy."

also this: http://www.moranlaw.net/nodischarge.htm

"Denial of discharge

The debtor can be denied a discharge of all of his debts if the court finds, after trial, that the debtor committed certain acts deemed incompatible with the "honest but unfortunate debtor".

Acts that may result in denial of discharge include transferring, concealing or destroying assets or financial records; making a false oath on the schedules or under oath in the case; or failing to keep books and records from which the debtor's financial condition can be ascertained. The complete list is found at 11 U.S.C. 727.

Denial of discharge affects the debtor's liability to all creditors, whether or not the debtor committed some fraudulent act with respect to that creditor.

Denial of discharge doesn't stop the administration of the case, either. The trustee proceeds to gather and liquidate the assets of the estate, so the debtor loses not only the non exempt assets but any chance of ever discharging the debts in bankruptcy.

Discharges are not denied lightly or easily. This is intended as a penalty for debtors who deliberately try unfairly or dishonestly to thwart their creditors.

Debtors who fully disclose their assets and their financial history should not worry about denial of discharge.

[catleg]

I am in agreement about calling their bluff. Take out service plan and depreciation, if they want more than $600 for that computer you should give it back, or technically, offer to give it back. Sears got in big trouble for those kind of reaffirmations back in the 90's.

[danaf]

Since it was purchased less than 30 days prior to filing I would return it and then there would be no issue of fraud, etc.

Buying something at $1500 within 30 days of filing will easily fit into the presumption of abuse and they can have the debt excluded but more importantly if viewed as fraud could put your whole BK at risk.

I think your lawyer was not paying attention or just did not care since he already received his fee's upfront.

I agree with the above - return it and figure out something else or reaffirm it if you want to file now. Just doesn't look good. With all the issues I'm seeing, BK is a new world now - tougher than when I filed last year. I just wouldn't take the chance.

[ryno]

Thanks for all your help guys!!!!! I guess now that I have already filed all I can do is sit back and wait to what happens but i'll keep u informed.

Thanks
Ryan

[nervousss]

He doesn't have to make any payments now if he's reaffirming. They will resume after the discharge I believe. That eliminates the issue of preferential payments.

If you think there might be a chance that it appears as fraud, I would pay off 1500 after you reaffirm. It's better than getting a dismissal, especially since that is such a new debt.

It's up to you obviously! If your lawyer doesn't think it's a big deal, maybe it's not in your district.

[AlreadyFiled]

The thing is our attorney warned us VERY sternly against entering into any side agreements or making any side payments to a creditor while the BK process was working. She said that to do so would cause us to run the risk of having our BK dismissed. She did not go into any details, and we we were too dumb to ask, but from reading other posts here, I think that if the trustee gets wind of these side arrangements, they could be viewed as 'preferrential payments.' That is, you are favoring one creditor over all the others, and it is not allowed.

This was not a "side" arrangement. It went through my attorney, posted on docket on Pacer "reaffirmation" and the reaffirmation was really good. I only owed $1800 on a camera and TV from best buy, they agreed to $1500 at 0% interest and pmts start in March (90 days from discharge date)

These werent done on the side and I was able to add that creditor to the 'reaffirm' portion of our bk papers along with my car and house.

it worked out fine... everything is good.

[ryno]

Here is a update on my best buy laptop situation - I went to court for BK and everything went great nothing about best best buy was ever mentioned. I have not made a single payment to Best Buy since the purchase.

The bass law firm everybody knows sent my lawyer a letter asking if I was going to surrender the laptop- has anybody had any experience with this type of request