Preferential Payment-Please HELP!

[okiemom2008]

We had the 341 meeting and the trustee was after us for everything. One thing he wanted to know about was about the payment I made to my moms credit card.

Well in June of 2008 my mom took out money for us of of her credit card and it went into our bank account directly. We cashed out our retirement plan in July and paid the card off in full. We had no idea we would be filing bk in 10 months. It was for 6000.00

He said to make sure and tell her she will be getting a letter. She does not even know we have filed bk so I am a little freaked out.

She lives in Texas which is a no garnish state, I think but not sure. She lives 14 hours away from the lawyer and where we filed. She works part time.

I just do not know what to do. I cannot quit thinking about what I need to do.

My lawyer is telling me to tell her to get a bk attorney to advise her what to do but there is no way I am going to make my mom go through all this. I have money in a IRA but it would take my whole IRA to pay this to him.

So basically she is probably going to be getting a letter saying you owe me 6000.00 or I will get a judgement against you, right?

What do I do? Sorry if it does not make sense..I am very upset about this.

[justbroke]

We had the 341 meeting and the trustee was after us for everything. One thing he wanted to know about was about the payment I made to my moms credit card.

That's an insider (payment) preference... for sure.

So basically she is probably going to be getting a letter saying you owe me 6000.00 or I will get a judgement against you, right?

Right.

What do I do? Sorry if it does not make sense..I am very upset about this.

I think the 'Cats went through something like this. They ended up paying the Trustee themselves. I'm not suggesting it, but you may need to liquidate your IRA if you want to pay it yourself. You could fight it, as the Trustee needs still prove that you were insolvent, amongst other things. Since I'm not a lawyer, I can't even fathom what your defense would be. However, the cost of fighting the Trustee is usually prohibitive. You'll have to ask your lawyer on the odds of being successful in challenging the Trustee in your area. Not that I suggest that either.

Sorry I don't have any clear cut do (a) or do (b).

[okiemom2008]

That's an insider (payment) preference... for sure.

Right.

I think the 'Cats went through something like this. They ended up paying the Trustee themselves. I'm not suggesting it, but you may need to liquidate your IRA if you want to pay it yourself. You could fight it, as the Trustee needs still prove that you were insolvent, amongst other things. Since I'm not a lawyer, I can't even fathom what your defense would be. However, the cost of fighting the Trustee is usually prohibitive. You'll have to ask your lawyer on the odds of being successful in challenging the Trustee in your area. Not that I suggest that either.

Sorry I don't have any clear cut do (a) or do (b).

See, that is what we are worried about. If we tell him we will settle for 2k then he will obviosuly know where we got that 2k(ira) and want all of it which we need right now because we are unemployed. And I just cannot give our only savings and our only money up.


So basically the lawyer also told us that she could try to settle with him...like I will give you 2k now or you can get a judgement against me and take it out of my check type thing

[okiemom2008]

I guess what I am asking is...what would you do if you were me? How do I break all this to my mom? And how do I make sure she Does NOT get a judgement against her and does not get her wages garnished(although I think Texas has 100% exemption on wage garnishment depending on what site you look on)

[justbroke]

I guess what I am asking is...what would you do if you were me? How do I break all this to my mom? And how do I make sure she Does NOT get a judgement against her and does not get her wages garnished(although I think Texas has 100% exemption on wage garnishment depending on what site you look on)

First, you're going to need to sit down with her real soon... preferably before she receives the Trustee's letter.

I don't have direct experience with this, and hope the Cats show up soon. With that said, I don't know what tactics the Trustee will use to recover the funds from your mom.

This is a case where you may need to make an offer to the Trustee to settle the amount. In that settlement offer you'd try to make the Trustee accept less than the full $6K by telling the Trustee that s/he will never see much money from mom if they pursue the money directly from her.

What does your lawyer think?

[okiemom2008]

First, you're going to need to sit down with her real soon... preferably before she receives the Trustee's letter.

I don't have direct experience with this, and hope the Cats show up soon. With that said, I don't know what tactics the Trustee will use to recover the funds from your mom.

This is a case where you may need to make an offer to the Trustee to settle the amount. In that settlement offer you'd try to make the Trustee accept less than the full $6K by telling the Trustee that s/he will never see much money from mom if they pursue the money directly from her.

What does your lawyer think?

Well my lawyer just keeps saying the same thing...Tell your mom to get an attorney or pay up basically.

Thanks for the help btw!

[NeedNewStart]

Okiemom,
I feel for you. That is a tough position to be in. I would tell her asap so that she knows what's going on.

Just a question for anyone who knows.... if she would have waited till June 09 to file (1 year since the payment) would she be in the clear?

[NeedNewStart]

Can you make some kind of payment plan with the trustee to pay it yourself?

[okiemom2008]

Can you make some kind of payment plan with the trustee to pay it yourself?

Well that's what I was wondering. I figured if I do the payment plan then he would want monthly payment until I hit 6k but if I can just hand over 2k now that would save me alot of money.

But he knows I have the whole 6k in the bank but that is all the money I have and I am not wiling to give it all to him.

My husband and I both thought he was out to get us from the start and we have no idea why. We have been upfront with everything.

[NeedNewStart]

Did your lawyer warn you about this?

[okiemom2008]

Yes he did but acted like it would not happen. Then the first question the trustee asks us is "tell me about this 6000.00" and I froze up. From there on out it was question after question.

I just talked to my lawyer..he is going to send him a letter saying we will settle for 3k. I am praying the trustee takes it. I will let you know what happens.

[NeedNewStart]

I have a similar situation going on. I gave my fiance $5000 in December and one of the lawyers I talked to said that I just need to wait 1 year to file and it wouldn't be a problem.

[OhioFiler]

If the debtor paid the creditor NOT mom, why would the trustee go after mom and not the creditor for the return of the preferential payment?

[StartingOver08]

The lookback period for insider payments is one year. OP, I wonder why your attorney did not counsel you to wait a year to file?

[justbroke]

I just talked to my lawyer..he is going to send him a letter saying we will settle for 3k. I am praying the trustee takes it. I will let you know what happens.

I hope that the Trustee takes the money. The Trustee's are usually smart and know that attempting to recover the money from your mom, will "cost" the Trustee money. From what I've learned, Trustees usually settle on these matters for less than the full amount.