Paying a family member

[msdmg]

Hi...I'm new to the forum, so forgive me if this subject has been posted already (I browsed a little, but didn't see anything).

I'm in the bankruptcy process and just today was supposed to go in to sign all the paperwork. On my forms I had indicated that I borrowed money from two persons and that I had paid some of it back to them - I did this in March after getting my taxes back and before even seeing a bankruptcy lawyer. One of the persons was a friend and they said that was ok, but because I paid some money back to my mother, the lawyer told me that I was going to have to get that and pay it back to the trustee when I filed. I am barely making it right now with my two kids, but I've already been served papers from one creditor, so waiting to file is not really an option, however, I don't have $2450.00. The money was used to pay back my mom for the money I used on her credit card last year when I wasn't working. I had I known about this 'rule' of not paying money back to a family member I wouldn't have done it, but it was never explained to me. Just wondering if anyone has any experience with this and/or is there something I can do? Thanks for any help.

~D

[eddiep]

Thank god for moms to help us when we need it! Is there any way mom could give the money back and you can make arrangements to pay her back later after the bk is over, like from next years' tax return. It is going to be an uncomfortable situation but just be honest with your mom and see if she can help again.

[optimistic1]

[music12]

only thing i can say is, i think you'd be responsible only for what was over $600 that you paid your mom. so if the total you paid her was $2450, you'd have to come up with $1850. still a lot, but a little less...

are you sure your name wasn't on her credit card?? if only you could turn back the clock...

i don't have any idea what they would do if neither you nor your mother have the money. if your mother paid the credit card, then that's where that money is. my logic says they should go after the credit card if they want the money back. after all, you are bankrupt for heaven's sake! but i don't know what the law says.

good luck

[JRScott]

You don't necessarily have to have the money upfront.

However yes you would have to repay the Trustee those funds (Unless he absolves his interest in it, unlikely for the amount though). Most Trustees are willing to set up some sort of payment plan for such items (as well as people wanting to keep property).

[msdmg]

First, thanks for the replies.

Second...I was talking this over with someone last night and they wondered if it was possible for my mom to give me back some of this and then put it back in my bank account, would the my lawyer possibly let me adjust the numbers on my paperwork? Nothing has been filed yet. So, say if my mom had a $1000 available and she gave it back to me, then I could use that to pay the trustee the remainder. I was going to call my lawyer and see, I figured it couldn't hurt to ask.

[StartingOver08]

Don't do that. I assume you gave your mother the money via check or some other verifiable way.

There is a place in the petition for the amount you have paid to insiders (relatives, friends). Make sure you speak to your attorney to find out the best way to handle it. You do not want to create another 'transaction' for the trustee to review.

[music12]

very interesting idea msdmg!

i guess the $1000 would be some kind of gift from her? reportable as extra income? or a new loan which would end up being discharged in bk?

or, essentially you will have "avoided" the transfer for the $1000 amount, leaving only the rest for the trustee to avoid, and now you will have the money to give it back.

there is something strange about being able to do this with half the original amount. the math is strange. but who knows, maybe it can work??

pls let us know what the lawyer says!

[msdmg]

I gave my mom some of the money in cash, because she didn't want my step-dad to know that I owed her so much money (I still owe her more than what I gave her). Apparently, she did nothing with some of the money, so I just thought if she gave it back, then it was kinda 'voided' out. My biggest concern with this is that the trustee will want the money right away (my lawyer said this could happen) and if I don't have the money, I don't want them going after my mom. She's done so much for me and I don't want her to have to worry about anything.

Here I thought I was doing good by being upfront and truthful and my finances and now I've just screwed myself with this!

[AngelinaCatHub]

I gave my mom some of the money in cash, because she didn't want my step-dad to know that I owed her so much money (I still owe her more than what I gave her). Apparently, she did nothing with some of the money, so I just thought if she gave it back, then it was kinda 'voided' out. My biggest concern with this is that the trustee will want the money right away (my lawyer said this could happen) and if I don't have the money, I don't want them going after my mom. She's done so much for me and I don't want her to have to worry about anything.

Here I thought I was doing good by being upfront and truthful and my finances and now I've just screwed myself with this!

Don't muddle the fuddle. If you start shifting money around as stated above, by several others, you will start to look manipulative ans suspicious. I had to pay back 5K as a loan from our god-daughter, who is not a direct relative. I had to go to a 2004? meeting and get interviewed by my Trustees purchased lawyer for this.

I must say, I had a wonderful Trustee. He gave me a year, no interest, lower debt than owed on my overages as an asset case as well as six months to come up with the 5K. I get paid an annuity every first of year. I am paid off now.

It is possible if you are totally honest with the Trustee, and today would be a good time to start at your 341 and honestly explain that you paid Mom back, not knowing the difference and just scraped by doing so over a length of time, and you just cannot afford a penalty if at all possible to avoid one. You will probably get your answer on the spot. They have discretion in some things. My TT had a heart or I would have been dismissed day two. 'Hub

[JRScott]

Your doing the right thing being truthful up front, Trustees like that actually. As CatHub says he might be willing to work with you on this if he knows the whole situation, and yes as also pointed out sometimes they offer deals for less than the actual amount...its easier to collect from you than to hire an auctioneer to sell stuff or a lawyer to retrieve funds.

[CH33 Paralegal]

You could do a 13 and propose to pay the pool amount over time.....it would be the last money to be paid though....that's one option, if you need a STAY.

Other than that, if you're in a 7, there will be an objection about preferentially paying money to one creditor while not sending any to others with that money.

[Amy26]

I have a similar question that I also need to bring up with my lawyer on Monday... but its slightly different than msdmg's problem. I also have money on a credit card that is my mothers. I have been making payments on it for 2 years. Never more than 100 dollars a month. I did accidentally pay 272 on the card last month because it was supposed to go to MY credit card and I accidentally put the online banking to hers. How will this be handled?

I have been paying money directly into the credit card account and never to my mother directly.

[dingdong]

You could always wait to file until the lookback period for preferential payments has passed.

If you are sued, the judgement can be wiped out in BK, and you can always answer the complaint and stall the lawsuit a little.

[msdmg]

Nothing has been filed yet and I have not met with the trustee at all. So, I guess I was thinking if my mom could give me some of it back and then I could deposit it into my account, then it would be like it never happened. Of course, that would all depend if my lawyer would allow me to change my paperwork before it got filed. I was unable to give the lawyer a call back today (my son had some minor surgery, so I was a little pre-occupied today), but I figured I'd bring the subject up and if he says no, then I'll have to pray that it works out with the trustee. I really need to get the filing process started now, because one, I have been served papers from one creditor (which I submitted some form to delay it in April) and two, I'm thinking of moving to another state if things work out with a new job. So, waiting a year from when I gave my mom money is not much of an option right now.