How do trustees get the money from "preferred" creditors?
Okay, a bit of the backstory before I ask my question:
Husband and I are in the process of chapter 7 bk. Have had the 341, and during the questioning (my gods I had never been so nervous as then!) we discovered that much to our embarrassment, a loan we repaid to my mother-in-law for 1k total happend in the year back from our filing date, *not* two years like my husband originally figured. As in we paid her from the tax refund of 2010, resultant of the tax return of 2009. My husband had 2009 stuck in his head. Explained to the trustee immediately that we had borrowed money from her for living expenses while husband was laid off, he indicated that *if* was going to pursue it, he'd get in touch with our lawyer for her contact info.
That was October 28th. Fast forward to today, when a very irate mother-in-law calls my husband and states that she received a letter in the mail informing her that the Bankruptcy District Court wants that 1k back. In two weeks.
Two weeks? Is that normal? How do they expect a retired woman to make 1k from last February magically re-appear? Do they realize that we will have to pay her back again, provided she doesn't skewer us this Christmas when visiting? Why wouldn't they have informed my lawyer? What doesn't make sense to me at all is that they wanted any payments above $600 reported. So if I had just paid her with two payments of $500 I would have been in the free and clear?
When we spoke to the lawyer immediately after the 341, he said that the trustee almost never goes after something that small, they can only recover something like 70% of the lump sum so it isn't worth the hassle for something small. Did he out and out lie to us?
Somewhat unrelated to the trustee but related to the lawyer being a buffoon: Is there a deadline that we have to sign the Form 24 (Verification of debtor education)? We were supposed to sign it the day of the meeting, but his secretary was out. Haven't been able to get a hold of either of them since the meeting.
If anyone can shed some light on what the recovery process is like, it would help a lot. I really don't want to see my MIL get hurt.
Husband and I are in the process of chapter 7 bk. Have had the 341, and during the questioning (my gods I had never been so nervous as then!) we discovered that much to our embarrassment, a loan we repaid to my mother-in-law for 1k total happend in the year back from our filing date, *not* two years like my husband originally figured. As in we paid her from the tax refund of 2010, resultant of the tax return of 2009. My husband had 2009 stuck in his head. Explained to the trustee immediately that we had borrowed money from her for living expenses while husband was laid off, he indicated that *if* was going to pursue it, he'd get in touch with our lawyer for her contact info.
That was October 28th. Fast forward to today, when a very irate mother-in-law calls my husband and states that she received a letter in the mail informing her that the Bankruptcy District Court wants that 1k back. In two weeks.
Two weeks? Is that normal? How do they expect a retired woman to make 1k from last February magically re-appear? Do they realize that we will have to pay her back again, provided she doesn't skewer us this Christmas when visiting? Why wouldn't they have informed my lawyer? What doesn't make sense to me at all is that they wanted any payments above $600 reported. So if I had just paid her with two payments of $500 I would have been in the free and clear?
When we spoke to the lawyer immediately after the 341, he said that the trustee almost never goes after something that small, they can only recover something like 70% of the lump sum so it isn't worth the hassle for something small. Did he out and out lie to us?
Somewhat unrelated to the trustee but related to the lawyer being a buffoon: Is there a deadline that we have to sign the Form 24 (Verification of debtor education)? We were supposed to sign it the day of the meeting, but his secretary was out. Haven't been able to get a hold of either of them since the meeting.
If anyone can shed some light on what the recovery process is like, it would help a lot. I really don't want to see my MIL get hurt.
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