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    #1

    Question on preferential payment

    I bought a boat in September of last year that my wife and I now live on. My contract was to have it paid off by April of last year with a 4 month buffer in case we could not pay it off. The boat falls under the homestead exemption and I am ready to pay it off at the beginning of June. The total is about 4500.00. We are going to pay it off with a 5000.00 settlement payment my wife is getting for a work injury which is also exempt money. Would this be using exempt money to pay for another exemption as we do live on the boat. We are probably not going to file until September as we are being sued on a carry back on our house and the soonest they will get a judgement is September. Will the trustee view this as a preferential payment? I am just paying the contract which is due NOW and not paying ahead of time...August is the latest we can pay it off or we will lose it.
    Thanks in advance.
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    #2
    Originally posted by captmorgan23 View Post
    I bought a boat in September of last year that my wife and I now live on. My contract was to have it paid off by April of last year with a 4 month buffer in case we could not pay it off. The boat falls under the homestead exemption and I am ready to pay it off at the beginning of June. The total is about 4500.00. We are going to pay it off with a 5000.00 settlement payment my wife is getting for a work injury which is also exempt money. Would this be using exempt money to pay for another exemption as we do live on the boat. We are probably not going to file until September as we are being sued on a carry back on our house and the soonest they will get a judgement is September. Will the trustee view this as a preferential payment? I am just paying the contract which is due NOW and not paying ahead of time...August is the latest we can pay it off or we will lose it.
    Thanks in advance.
    From my understanding preferential payments that are a no-no are those that are paid to unsecured debt. Your boat loan is for a secured debt. As always, pick up the phone and call your attorney for clarification.
    Filed Chapter 13 02/2006 - Confirmed 05/2006 - Discharged 09/2011
    I'm not an attorney. My replies are merely suggestions or observations, not legal advice. As always, consult with an attorney before making any decisions.

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      #3
      Yes, a preference only applies to an unsecured debt. You can pay anything you want anytime you want towards a secured debt and there is no recourse.
      filed chapter 13..confirmed...converted to chapter 7...DISCHARGED!

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