I'd like to quietly repay a small loan....

[nickifan]

Okay...I expect I know what the lawyer would say but I'd like some thoughts here.

I have put down $500 to retain my Ch 7 BK attorney. The paperwork (several trees have died) says NOT to make any loan payments to family or close friends without speaking to the atty first, as so doing would have "grave consequences" for the BK.

A local friend gave me $400 cash in October so I could make the rent. I emphasize cash because there was no 'paper trail' of a deposited check.
Now that I am working (thank you Lord) I could give her $200 for the next two months --in cash -- and just make that loan go away. I do feel very awkward because she knows I'm working but I haven't mentioned the BK yet and that I may have to hold off on repaying her. (My hand was forced by a lawsuit from Target in early Jan...interestingly enough their law firm just sent me a letter offering settlement. Too late -- and there are many other creditors to worry about -- but I guess even a lawsuit is not the last word.)

Anyway...would it be so bad to just pay my friend back and not say anything to anyone -- i.e. the atty? It's a small amount and cash, so what exactly is the big deal?

Don't yell at me, just explain .... Thanks.

[DebtEnder]

While the amount is small enough to probably pass undetected the UST does do random audits. It would be best to wait till after your discharged and closed before making any payments on anything unsecured. What you do after your case is done is up to you. What is done once you file, or know your going to file, is up to the panel trustee. Any cash you give to one creditor over others is preferential and since there as no paper trail the panel TT could see it as you trying to hide assets.

[frogger]

I have put down $500 to retain my Ch 7 BK attorney. The paperwork (several trees have died) says NOT to make any loan payments to family or close friends without speaking to the atty first, as so doing would have "grave consequences" for the BK.

When you file bk, this debt needs to be listed. There is no reason that you can't pay this or any other debt back after your discharge, but you need to pay close attention to what your paperwork states.

You're paying an attorney, listen to them.....

[tcreegan]

Hi nickifan,

The safest course, of course, is to wait till after discharge.

But, a couple $200 payments are not likely to cause trouble. The lowest amount I have seen posted that caused trouble was $500

The "grave consequences" are that the trustee wants the money back for distribution.

Do tell your attorney! They have to be ready for anything that could threaten your case, you don't want your defender to get blindsided by something!

Alternate nifty idea: find a way to exempt $400 cash, pay them out of exempt cash.

Good luck to you, glad you are in the ranks of the employed again!

Tom in Colo

[nickifan]

Thanks everyone. I will run it by the attorney. But I remain puzzled by how any "random audit" would detect cash transactions....especially if I cash a postal money order (gifted to me by a dear friend) at the post office. Who'd know??

[frogger]

Who'd know??

You would. Remember, you'll be signing paperwork that lasts forever.

[AngelinaCatHub]

As a major victim of stupidity (ignorance is better) I had the pleasure of paying 5K twice. Once to my god-daughter for living expenses, and once to the bk Trustee so that god-daughter would not be sued to avoid my loan.

That being said, you sign those papers and that is the same as a sworn statement. Technically, it is preferential. In reality, can you perform work for that person to equal that amount? Labor is your own. Money belongs to the estate once filed. All above says wait till your discharge. I say that too.

Is the chance worth the worry stress? Ask your 'friend' if you can wait technically to just assure the person you can pay but can't legally. That person kind enough to help you would be kind enough to understand, I am sure. 'Hub