PayPal account and Chapter 7

[kathy4530050]

I'm new to this forum and am about to file Chapter 7 (in a few days). I am self-employed and last week a client asked if they could pay me via PayPal. I didn't have a PayPal account, but set one up for this client. Now I have about $5,000 sitting in this account. On my lawyers advice, I haven't yet repaid any of the money I currently owe friends and relatives. However, I just realized that if I ask THEM to set up a PayPal account, I can transfer money into their accounts and, I am hoping, avoid problems with the bankruptcy. Could this work? Is there any way the trustee could find out about this account? It's currently linked to a bank account that I am about to close due to some service issues with the bank. If I close the account with this bank and request a check from PayPal could this be something the trustee doesn't find out about?

Thanks!

[akame5150]

The trustee can find out just about anything. Even if you feel like they won't, it is better to be honest and upfront to avoid future problems.

If your lawyer told you to leave the money then you should listen to that advice. There is a reason you hired the lawyer.

Good luck.

[StartingOver08]

Kathy, the Trustee knows about paypal accounts. They also know all about the ways that debtors 'forget' to list items. Don't go there - when you go to your 341 you are testifying under oath and it is recorded. The Trustee has an entire department to do nothing but check petitions for accuracy.

[kathy4530050]

OK. You're right. I was just hoping. I guess I'll just transfer that money into my bank account now. I definitely don't need trouble or suspicion. I just hate not being able to pay back the people I owe. And I have a little to start paying them back now! I don't know if I'll have the money to pay off my personal debts when this is all over. Discouraging. . . Thanks for the good advice.

[StartingOver08]

You can pay anyone you like AFTER your discharge on a voluntary basis.
Any funds you pay before filing to friends and/or family is considered an insider transaction and the Trustee looks back ONE year for those type of transactions.

[kathy4530050]

Do you think that the trustee looks back into EVERYONE'S history for payments to family or friends, or just the people who get audited? I couldn't make my February rent payment and so my sister loaned me the money--and she didn't really have it to loan. She needed it back asap and so just as soon as money came in I paid her back. I really had to or she would be in trouble. Although I owe other people, she is the only one I've paid.

[StartingOver08]

They look back on everyone's history for insider payments. When you are in the sprialdown period, many, many people borrow from friends and family and return the funds right away. If you wrote a check to your sister to pay her back for the money you borrowed, the Trustee will see it.

Make sure to discuss this with your attorney. The Trustee will probably go after the funds.
Now, having said that, I paid back my daughter $500 within 90 days of filing and disclosed it in the petition (had to because it was a check and very obvious). The Trustee asked me about it, but did not go after my daughter to collect the money. I think because it was such a small amount. So make sure to discuss it with your attorney so you have a plan to handle it.

[kathy4530050]

ok. Good advice. I'll let my attorney know.

[heyu]

In my opinion, I think that if you use cash to pay someone and its not obvious,(ie large transactions) then no one will know what it is for or to who or what it was used for, use your discretion, use the money to pay your sister but pay in installments, anyone ask, you used it to pay bills, which is the truth.