insider payments

[OKBK]

I payed off my grandmother's loan I had with her with my credit cards (she had a BoA loan). This debt came from my CC that I consolidated with her loan. It has been just over 6 months and I have one lawyer telling me to file that it doesn't matter and another saying I have to wait until 1 year after I did that. Anyone know for sure? Chapter 7 and I am in Florida.

[banca rotta]

I payed off my grandmother's loan I had with her with my credit cards (she had a BoA loan). This debt came from my CC that I consolidated with her loan. It has been just over 6 months and I have one lawyer telling me to file that it doesn't matter and another saying I have to wait until 1 year after I did that. Anyone know for sure? Chapter 7 and I am in Florida.

That's a good one because you paid it on your Grandmother's behalf, but I imagine you wrote the check to your grandmother's creditor. If that's the case you probably won't have a problem filing sooner. If you gave your grandmother the check or any cash then you must wait.

Hopefully someone with experience can help with this.

I love how you get different answers from the lawyers when they are supposed to know this for sure.

[ForumReader]

That's a good one because you paid it on your Grandmother's behalf, but I imagine you wrote the check to your grandmother's creditor. If that's the case you probably won't have a problem filing sooner. If you gave your grandmother the check or any cash then you must wait.

Hopefully someone with experience can help with this.

I love how you get different answers from the lawyers when they are supposed to know this for sure.

*squeak* I agree, oh boy talk about having the confidence of having a good knowledgable and experienced lawyer when there are lawyers out there with different answers to the same question

[AngelinaCat]

I am a little confused. Are you paying off a loan that your Grandmother had with BoA? Or are you paying back a loan you got from her?

[AngelinaCat]

*squeak* I agree, oh boy talk about having the confidence of having a good knowledgable and experienced lawyer when there are lawyers out there with different answers to the same question

That is why one poster, on recommending buying the Nolopress Ch7 book, stated: "It helps keep the laywers honest!"

[OKBK]

She had a loan that she gave us cash out of. I repayed that loan by transfering balances to my CCs from that loan that was in her name.

[banca rotta]

Interesting reading on this subject. Looks like the 6th circuit ruled a similar situation to yours a preferential transfer.

Hope this answers yours and anyone else in this situation.

Again can never understand why "Mrs Dilworth" or anyone else needs to file 53 days after such a questionable move. She must have wanted to beat the Oct 2005 deadline and she did. I guess their mistake is everyone elses gain such as the OP who is smart enough to ask the question before filing. Now we can all learn from Mrs Dilworth.


In re Dilworth, 6th Cir.

http://caselaw.lp.findlaw.com/data2/circs/6th/083389p.pdf

[shabam]

It would definitely be an interesting case if it ever proceeded to court. Like anything, it depends on technicalities. If the courts consider your family member creditor as an insider, then yes it would be a preferential payment, as it falls within the year. However, since you did not owe your family member directly, normal preferential rules may apply. After all, you did not pay her but the creditor. The balance transfer check was made out to the creditor right?

[justbroke]

It still reads as a preference to me, but preferences are only good for 90 days. However, the Grandmother was the creditor, not the Grandmother's bank. This then makes me believe it's an insider payment, as the payment was to the benefit of the Grandmother.

So, it's either 90 days or 1-year.

I would err on the side of caution, and say that it was an insider payment. Here's why. First, your grandmother received a loan, not you. Second, your grandmother loaned you money (irrelevant that she obtained a loan in order to do so). Third, you paid the loan back by using another loan.

That's a preference. Now, regardless of whether you paid your Grandmother's lender back directly or not... the payment is to the benefit of your Grandmother for the sole reason you are "paying her back" for loaning you the money.

That there, folks, is an avoidable insider preference.

The funny thing here is, we are all over this, but the person who the Trustee would go after, is the Grandmother's lender. Now, that would mean the Grandmother's lender would eventually seek to recover from the Grandmother, but it's still not the Grandmother who they would seek the recovery from. (If in fact the debtor paid the Grandmother's lender directly.)

[shabam]

When you put it that way, it is an insider payment. Regardless of how grandma obtained the money herself, grandma basically loaned them the money and expected to be paid back.

This rule is quite unfair and does place unnecessary and unreasonable hardship on unknowing individuals and their family. 3 months for creditors but 12 months for family. 6 months would have been understandable. How hypocritical that the politicians renowned for looking out for their own, would throw individuals under the bus.

[whipster1]

Yep the trustee would say insider since Granny got the benefit.

Make a few payments on those cards you used then turn off the phone ringer for a year.

[justbroke]

How hypocritical that the politicians renowned for looking out for their own, would throw individuals under the bus.

Remember, these are the same Bozos that used to write bad checks, with impunity.

[shabam]

Hiding assets is one thing but a debt is a debt. This persons grandma now may be dragged through this even though she had no idea about the hole bk process.

If it's only a few thousand, I highly doubt the trustee would waste their time chasing it up.

[banca rotta]

Yep the trustee would say insider since Granny got the benefit.

Make a few payments on those cards you used then turn off the phone ringer for a year.

Exactly my point! Since we don't know for sure for the sake of the OP sparing grandma any unpleasant surprises with the standing trustee the best thing would be to file on day 366, after the check went through. Hopefully the OP has no reason to file sooner.

This could get ugly if the trustee feels this is a pref.

[justbroke]

If it's only a few thousand, I highly doubt the trustee would waste their time chasing it up.

Oh, yes they will. Remember, the Trustee makes absolutely NO MONEY unless they find assets. If they find something they get 25% of the first $5,000 (and 10% of the next $45,000). That's nothing to sneeze at. Especially since more than 90% of cases are no-asset cases.

While the Trustee's job is to scare up funds for the unsecured creditors... s/he makes a very good commission on things under $5,000. Even if it really isn't worth the Trustee's efforts, they'll still try to get people to settle for less.