Loaned a friend $1200 for college

[Penny Less]

My life got better last year before filing BK and I didn't.

I recently loaned a friend $1200 for college. At around the same time I was hospitalized and am now back on the CH7 BK trail. The check is dated a few weeks before my hospitalization but cleared the bank the day after I was released.

I read up on preferential payments and fraud, etc. Where would something like this fit? It wasn't a gift, I have every reason to expect the money back. He could repay me in a few months with some hardship but I want to handle this absolutely correctly with all options open to me and him.

The timeline is:

6/09/09 - Gave check (dated this date w/comment on loan)
6/19/09 - Health expense
6/22/09 to 6/23/09 - Expensive Hospitalization still waiting for bill
6/24/09 - Check clears bank

I am in the process of getting a lawyer but would appreciate any feedback and insight while I do this.

[eddiep]

Not sure if this will be a problem, but I have to tell you my first reaction is, if you are bankrupt why are you lending money to others when you are unable to pay your bills. Wonder if this thought will cross the trustee's mind as well.

[JRScott]

I'm a little confused by your wording, did you file BK last year?

[lrprn]

Not sure if this will be a problem, but I have to tell you my first reaction is, if you are bankrupt why are you lending money to others when you are unable to pay your bills.

Eddie, the OP posted that she made the loan then 10 days later had unexpected medical problems that set her back on the bk road.

Yes, loaning the money probably wasn't the best thing she could have done, but I often fail the crystal ball test myself. How's your own crystal ball doing to tell the future?

[lrprn]

I recently loaned a friend $1200 for college. ...
I read up on preferential payments and fraud, etc. Where would something like this fit? It wasn't a gift, I have every reason to expect the money back.

This doesn't qualify as a preferential payment because you didn't owe him any money. He owes YOU money

The $1200 he owes you has nothing to do with your own bankruptcy. It isn't an expected inheritance or windfall that would have to be listed on your filing forms, so your trustee won't care about it either.

In short, hopefully your friend will pay the cash back to you sometime after you file. Frankly, unless you have a signed, legal agreement stating he will pay back the $1200, there's nothing you can do to force that to happen. Hopefully he will keep his word.

I also hope your health issues are better and you are feeling good again.

[eddiep]

He said he was "back on chapter bk 7 trail". I assumed he had put the bk on hold until he got out of hospital.

[JRScott]

He probably did Eddie

[lrprn]

I'm a little confused by your wording, did you file BK last year?

The OP said she came close to filing last year, but then she did not have to file. It's the unforeseen medical problems after the loan she gave her friend that made filing come back into the picture.

[Penny Less]

Thanks for the replies guys. It makes me feel better. I guess I've never been in a position to lend money before, it's strange and new being on the other side however briefly. Repayment isn't an issue to me as this friend lent to me when I was in a very bad downward spiral of my own making with no expectation he would be repaid.

I discovered this forum last year after hitting dead rock bottom - my small business failed, my CC's hit universal default, I was in such bad shape I was having trouble saving for the Chapter 7. I was a wreck emotionally. You guys really saved me.

While saving for the CH7 I ended up getting a really good job offer, a REALLY good job offer, just out of the blue, I got really really lucky. There was hard work, but there was mucho luck too - this was in December. I saved every penny, I lived within my means, my plan was to pile up enough money to take care of myself - a real emergency fund - then repair or figure out what to do about the old debts which didn't seem so unmanagable anymore. The creditors made this easy as they had mostly quieted down by the time I got this job.

Well, my new job was a contract, it was supposed to go perm, but didn't. I really needed the health insurance more then anything - I'm too healthy & employable for state aid, and make too much to qualify for "middle class" help. But I do need it, I have pre-existing conditions that make it hard to get private insurance. I'm healthy most of the time but it's the few times I'm not that can sink the ship.

Well, my last month of the contract, this past week, I end up in the hospital. And next week my job goes bye bye to some intern.

I have about 10k in savings. I owe about 30k in bad CC debts, 10k in bad hospital bills, plus this new hospital bill which will probably double everything.

This new job opened some doors, but it could be a few months before I get another offer. I'm tired of having crappy credit even though I don't use it much anymore. Plus having to worry about being sued. So, I'm thinking about filing again, especially with this new bill looming.

Salary wise my contract was for $50 / hour but I didn't work the hours needed to get as much as I could have out of it. My next job will be similar but with benefits hopefully.

[Penny Less]

This doesn't qualify as a preferential payment because you didn't owe him any money. He owes YOU money

The $1200 he owes you has nothing to do with your own bankruptcy. It isn't an expected inheritance or windfall that would have to be listed on your filing forms, so your trustee won't care about it either.

I also hope your health issues are better and you are feeling good again.

My health is much better, thank you! But it's still kind of a looming thing, I get ahead a little bit, then oops! huge set backs. Most of my credit card debt is medical expenses (yes I was stupid about this back when it was easy to get credit).

I mainly thought there would be complications or something if it looked like I was giving cash away before filing. Eg money that could be used to pay creditors, however small in comparison to the debts. I'm planning on being 100% up front with everything during the process of course. I just don't want to wait anymore, I want my finances fixed so I can move on. And I can actually afford the CH7 now too.

Anyway I want to time this BK before I start my next job, then make sure I get good health insurance from it or just give up and move to Canada. I'm not even really "sick" - I just have bad allergies and asthma that gets me into expensive trouble sometimes.

[keepmine]

One of the things you'll be asked is, "does anyone owe you money".
At that point, it's up to the trustee to make a decision on whether to pursue the other party for repayment on behalf of the bk estate.

[Trixie007]

If this is a recurring condition, you might be better served to wait until you have insurance before filing.

[music12]

trixie makes a lot of sense. file only after you have insurance or you might end up with medical bills again with no bk recourse for 8 years.

[Penny Less]

To the previous poster I suppose the other view is that the sooner I file the sooner my 8 year timer starts? I think I'm going to be staying in Canada w/friends on travelers insurance until my 341, then trying very hard to get a good job here or there.

Thanks again for the responses guys. I'm actually 100% feeling better now. :-)

[music12]

i think this view is actually planning on filing a second bk, which is not a good idea at all! after your bk you want to be gathering assets so that you will have something to retire with. it makes no sense to plan on another bk.