insider loans - recollection

[acro68]

Insider loans are disclosed on the petition. If the petition is rejected, dismissed, or withdrawl, does the Trustee or the creditors try and collect on the insider loans?

[despritfreya]

Insider loans are disclosed on the petition. If the petition is rejected, dismissed, or withdrawl, does the Trustee or the creditors try and collect on the insider loans?

This is very cryptic. Do you mean you owe money to an insider or does an insider owe money to you? If you owe the money are you worried about the recovery by a Trustee of the preferential payments you have made? If the money is owed to you are you worried that the Trustee will take over the loan and try to collect from the insider?

In general, if your case is dismissed, all parties are put back into the position they were before the case was filed and creditors are free to collect under State law.

Please clarify your question so that we may more fully respond.

Des.

[tcreegan]

Hi acro,

Which way are the insider loans.....them-to-you or you-to-them ?

Money coming to you becomes assets for creditors to go after.

Money going away from you makes you the creditor, much harder for the creditor of a creditor to collect

If the petition is withdrawn or dismissed the trustee has no more say in the matter.

Tom in Colo

[acro68]

Sorry for being so cryptic, just reflecting my current mental health. Please help with the following questions:

If I list a brother as a debtor, what is the risk to him when going into the 341?
If the Trustee approves the petition, the trustee will go after and get the money?
If the petition is withdrawn or if the case is dismissed, the trustee will have no power to go after the money, what about the creditors after the 341?

[ccsjoe]

If you list your brother as a debtor the trustee very well can go after him. If case is voluntarily withdrawn (must have very powerful circumstances for a judge to allow this) or is dismissed, nobody can go after the money your brother owes you, not even the creditors.

[AngelinaCatHub]

Sorry for being so cryptic, just reflecting my current mental health. Please help with the following questions:

If I list a brother as a debtor, what is the risk to him when going into the 341? Are you saying you paid him? Still not clear enough. If he owes you money, that is a future asset and yes, it could be levied against you. Your case would not be closed until the asset is paid.
If the Trustee approves the petition, the trustee will go after and get the money? Yes, if you paid him above other creditors. I was there, I paid to release my son-in-law so I paid twice.
If the petition is withdrawn or if the case is dismissed, the trustee will have no power to go after the money, what about the creditors after the 341? Yes and Yes. You will be in the exact state you were before you bk'ed. The creditors will be at your throat once again.

FIRST: Greetins Des, where you been?

Acro, I hope that gets it right for your question. If my assumption is wrong and I do understand your 'state of mind' as I've been there, please clear it further. 'Hub

[tcreegan]

Hi again acro,

If I list a brother as a debtor does this mean you gave $$ to him? If so, it is an insider payment and the trustee can go after him for it. If he gave $$ to you, then he is a creditor. I'm not sure, but I think he would have the same rights as any other creditor....

Tom in Colo

[acro68]

I gave money to him as a loan, he paid part of it back.

Will the trustee go after him for the balance if the chapter 7 is approved?

Will the trustee go after him for the balance if the chapter 7 is rejected?

Does the smell of money influence the trustee?

Will the creditors go after the money if the chapter 7 is rejected?

[melissah34]

If the case is not dismissed for any reason then the trustee may or may not go after your brother. It depends on what kind of payments you were making and whether you were insolvent while making them. They have to be insider and preferential. For instance, we have a large loan from my parents but the payments were very regular and we were paying everybody the same up until we decided to file and stopped paying my parents at the same time as we stopped paying everyone else. The trustee did ask a lot of questions about it but never went after them. We were told by our attorney that when a trustee decides to go after money like that you would go to court and if the judge finds in the trustee's favor they will often give you a chance to make payments (so you kind of pay the debt twice) as opposed to suing the creditor.

**Sorry posted at the same time and I realize what I said isn't relevant.**

[despritfreya]

FIRST: Greetins Des, where you been? 'Hub

Hub,

Thanks for asking. Working on an appeal so my time is extremely limited for the next two weeks.

Des.

[despritfreya]

In response to:

"I gave money to (my brother) as a loan, he paid part of it back. Will the trustee go after him for the balance. . .Will the creditors go after the money if the chapter 7 is rejected?"

1. The asset (money you are owed) needs to be disclosed on Schedule B.

2. The Trustee does have the right to try to collect from your brother. How much $$ are we talking about? Before the Trustee goes after a family member he/she will most likely ask if you want to step in and pay the $$ so that the family member does not become a target.

3. If your case is dismissed (highly unlikely unless you do not file all of your required Schedules and/or do not appear at the 341) the Trustee will no longer have an interest in the asset.

4. Yes, the "smell of money" influences the Trustee as it does for all of us.

5. If your case is dismissed AND a creditor obtains a judgment against you, that creditor can use whatever tools your state allows for collections. If garnishment of monies owed to you is allowed then, yes, the creditor could demand payment from your brother. However, most creditors are not that smart so I wouldn't worry about it.

Des.

[acro68]

Thanks for your help!

[AngelinaCat]

I gave money to him as a loan, he paid part of it back.

Will the trustee go after him for the balance if the chapter 7 is approved?

You will be asked at your 341 if anyone owes you money. You will have to say yes. If the amount your brother owes you is significant, then the trustee may.

Will the trustee go after him for the balance if the chapter 7 is rejected?

No, you go back to square one, where you were before you filed.

Does the smell of money influence the trustee?

It may seem like it, as the trustee works on the behalf of your creditors. But if your petition is dismissed or withdrawn, then no.

Will the creditors go after the money if the chapter 7 is rejected?

Again, you will go back to square one where you were before you filed. There will be no Automatic Stay, and the creditors can pursue you for their money, just as they would, or were doing as if you had never filed in the first place.

Good luck. I think your decision to go with an attorney is a good one.

[acro68]

Thank-you AngelinaCat, I understand much better now what the possible outcomes would be and why.