"preferential" payments to creditors up to $599
this might be an odd question, but I hope to get verification from anyone out there. Here's my story: I need to file chapter 7 in about 60 days. I stopped paying my credit card "creditors" as of Nov.1. However, back in October, I had to borrow $2600 from 2 friends to pay October and November rent and expenses. I've been told by a pro bono bankruptcy attorney that I can pay back both friends up to $599 each, without it appearing as a "preferential" payment to a creditor (my friends). Is this true? Are there any other technicalities I should be aware of????? thanks!
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It is not exactly true. The amount would be $600 total for a whole year, to an insider. If you paid $600 over a whole year to your friends, it would be considered "insider" payment, and the trustee can go after your friends for the money. That is exactly what happened to me. The trustee went after my mother for two $500 checks that I gave her. That is why I am an asset case. The $500 payments were not even payments on a loan but were checks I gave her to help her out.Originally posted by bankjob View Post
So if you gave your friends any of the money back already, or gave them any money for any reason this year, or bought them anything this year, you need to count that into the $600 total that you cannot exceed. This is a controversial matter though. I did some research when this happened to me, and some districts will count each separate payment that is $600 or over as a preference, while some other districts will aggregate the total amount of payments and if they add up to $600, there is a preference.You can't take a picture of this. It's already gone. ~~Nate, Six Feet Under
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