Can't find the answer anywhere. Please help!

[Michellemg]

I plan on filing chapter 7 once my income falls below median. I live with my mom and don't pay rent. I do, however, pay all the utilities straight out of my checking account but they are all in her name. Is there any potential problems with this? Do they see it as a preferential payment or anything? If there is a potential problem please advise. Thank you very much!!

[keepmine]

The only problem may be you won't be able to use the utility payments as a schedule J expense since, you have no legal obligation to pay them.
They aren't a preference issue since, the utilty company isn't a creditor.

[daylate]

The only problem may be you won't be able to use the utility payments as a schedule J expense since, you have no legal obligation to pay them.
They aren't a preference issue since, the utilty company isn't a creditor.

But if after filing you plan on ,moving out and getting your own place then you could include rent & utilities that you expect to pay.

The other thing that you might be able to consider is paying your mom rent with a signed lease instead of paying the utilities. Don't know if that is a permissible thing to do or not. Hopefully someone will know.

[momofthree]

I was going to suggest the same thing as Daylate. Pay your mom a "rent" amount equivalent to what you're paying in utilities, and have her pay the utilities directly. You are definitely allowed a rent expense. Paying rent, utilities, food, etc. is not a preferential payment.

[daylate]

If you start paying rent make sure you have a signed lease and get receipts. The other issue you could have is making sure you show you pay for your share of food.

[newbie2]

You could also simply explain that you live with your mom, and in lieu of rent you pay the utilities. After all, that appears to be the arrangement and you have records of this. I wouldn't sweat it too much. It's not that unusual when living with a relative or friend to have these types of arrangements.

[Michellemg]

Ok. See I pay all the utilities, insurance and so on cause I've been scared that if I transferred money to her every month that it could possibly look like an insider payment. Do you think it's better to keep doing what I have been or pay rent? If rent is the better option how do we go about doing a lease agreement?

[newbie2]

Have you talked with an attorney Michelle? I don't see how paying rent would ever be considered an "insider" payment. People make too much of that...it's for those who are funneling money to others in detriment to the unsecured creditor or to hide money from a bk trustee. You are not doing either of these things. I would ask your attorney if drawing up a lease now would help, or if it would be better to keep things as they are to show consistency.

[stratos]

This is just my observation, not a legal op, but... Isn't a preferential payment when you pay a chosen creditor before another one, not when you simply pay your usual expenses? If you have an agreement with your mom to pay the utilities in exchange for living in the house, that sounds like you are obligated to pay the utilities, and thus, it is would properly be your expense. Would a trustee really object to such a reasonable expense?

If you go the "rent" route, you might want to consider how that will impact your mother's income and whether she will have to pay taxes on rental income.