Preferential Payment-Please HELP!

[DebtStinks]

But the insider does have a financial relationship to the creditor which links them and I would think supports the agrument for an insider payment.

[justbroke]

But the insider does have a financial relationship to the creditor which links them and I would think supports the agrument for an insider payment.

I think you hit the nail on the head, and beyond that, the payment was to the benefit of the mother. To or for the benefit of a creditor (11 USC 547).

I can't remember who posted, but someone else got it right too. Unless the OP was an authorized user on that card, they enjoy no financial relationship with the lender, and the lender is not their creditor. Therefore, the payment, direct or not, was to the benefit of the mother, who is the creditor in this case.

(wow, you guys have been busy discussing this... nice and thought provoking comments too.)

[keepmine]

This should be no surprise to the OP. Look at her posts from Feb. when she asked this question. Someone raised the preference issue then and several advised her not to file until a year had passed since the payment.
Sorry to say it but, these wounds were selfinflected.

[DebtStinks]

You have to take the advice here with a grain of salt... but I would think a good attorney would have caught this if it was disclosed. Best thing would have been to wait a couple of months to file. Not sure there is an easy fix at this point.

[coralfang]

sorry, don't mean to steal the thread from the op

What if the payment was not made to your mother's card, but to your wife's card? I'm not an authorized user on that card. We have made payments to her card but not any of my creditors. When we approached our lawyer about it, he said it would be fine. I'm filing chapter 7 by myself.

[justbroke]

What if the payment was not made to your mother's card, but to your wife's card? I'm not an authorized user on that card. We have made payments to her card but not any of my creditors. When we approached our lawyer about it, he said it would be fine. I'm filing chapter 7 by myself.

I wouldn't even venture to guess, except for this. In most States a husband and wife are a single legal entity. In some States it goes further (community property States). So, I would say that a payment to the spouse is not an insider payment in any case! At least that's my opinion on that.

[keepmine]

. Since payments are being made to the card, if your wife is working and the funds are coming out of a joint account the trustee may not have an issue. If it is an issue, they'll recapture the funds from the cc company.
Your situation seems a lot different from the OP. Sounds like you're making minimum monthly payments and not repaying thousands of dollars in one payment.
I'd suggest you inform your lawyer and secondly, let your wife start making payments from an account in her name {again, assuming she has a job and can fund the account herself}.

[lalap123]

Coralfang,
I'm in the same boat. Cashed in pension plan in February, made large payment to husband's credit card in same month. Since the funds were in the joint account in which my husband gets his paycheck deposited the atty I spoke with said that they could not prove that he didn't use his money to make the payment. The 90 day look-back wouldn't apply in our situation, according to him...

[BnkrptcyLwyr]

The payment is not a preference. A preference involves the payment to a "creditor." The term "creditor" is defined as a creditor of the debtor.

The transfer is, if anything, a fraudulent transfer under 11 USC 548(a)(1)(B)(ii)(IV) as a payment "to or for the benefit of an insider."

You could force the Trustee to go after the credit card company as the initial transferee, but then your mother would owe the credit card company again.

So, you're in a pickle.

Settle ... and yes, Trustee's will usually take less.

was to the credit card company - not your mother directly.

[okiemom2008]

This should be no surprise to the OP. Look at her posts from Feb. when she asked this question. Someone raised the preference issue then and several advised her not to file until a year had passed since the payment.
Sorry to say it but, these wounds were selfinflected.

That is true but like I said earlier, I talked to my lawyer and he advised me that the trustee would probably not bother with it. He did not say 100% but he did say probably not. We had to file asap for other reasons also but yes it was a chance we took and are just now hoping the trusteewill accept it.

[EricaCallaha]

Looks like the lawyer should have prepared you for this a little better. $6K is a lot of money in a bankruptcy (or in any case).

You are right. It is the chance you take.

Hopefully the trustee will accept the settlement and you won't have to involve your mom.

Good luck.

[2Bshinyandnew]

The payment is not a preference. A preference involves the payment to a "creditor." The term "creditor" is defined as a creditor of the debtor.

The transfer is, if anything, a fraudulent transfer under 11 USC 548(a)(1)(B)(ii)(IV) as a payment "to or for the benefit of an insider."

You could force the Trustee to go after the credit card company as the initial transferee, but then your mother would owe the credit card company again.

So, you're in a pickle.

Settle ... and yes, Trustee's will usually take less.

was to the credit card company - not your mother directly.

I thought mom was a creditor? I asked this earlier but I'm not sure the OP answered whether mom was listed on schedule F. The OP said she borrowed the $6K from her mom (who used the CC to fund the loan)

[eddiep]

I'm gonna be a jerk here. You made a mistake, took a risk, whatever and you have the money in the bank to pay it back. It is a no brainer! You need to tell your mom whats going on and let her know you will pay the $6000 if that is what the court wants. It stinks I know but if it costs $6000 to unload the rest of your debt and not stress out your mom than that is what you have to do.

[Willy13]

Well this topic has scared the living daylights out of me. The only difference between me and the OP is, I'm an authorized user on the other persons cards, the bank account used was a joint checking with the other person, and the money was considerably more. Oh and the big difference, neither of us has the ability to pay. All the other person has is the famliy house and I have nothing. I guess I'm going to try for the 3 year wait which I think is the lookback limit for my state. Maybe the cards will give me a good settlement opportunity.

The scariest thing was the fact that the lawyer thought nothing of this and was 100% wrong. Man this stuff sucks

[okiemom2008]

Well this topic has scared the living daylights out of me. The only difference between me and the OP is, I'm an authorized user on the other persons cards, the bank account used was a joint checking with the other person, and the money was considerably more. Oh and the big difference, neither of us has the ability to pay. All the other person has is the famliy house and I have nothing. I guess I'm going to try for the 3 year wait which I think is the lookback limit for my state. Maybe the cards will give me a good settlement opportunity.

The scariest thing was the fact that the lawyer thought nothing of this and was 100% wrong. Man this stuff sucks

Since you paid out of a joint account you should be ok, I think