Is this considered transferring assets/property/preferential payment?

[Judeebubzee]

Hello,
If I start taking college classes this August and have someone pay for my classes and then pay them back with the financial aid I receive, is that fraudulent? In order to attend classes, I HAVE to make payment BEFORE financial aid is disbursed. It would be around $2500.00. So basically what would happen is my friend would pay the school directly, the school would then give me a check for the financial aid and then I would cash it and give that person the $$ they paid on my behalf. I don't "make" any money and the only $$ given to my friend is the exact amount they paid to my college. To me it sounds like it would be OK but I don't want to do anything that might cause problems down the road when I need to file. Thank you.

[HHM]

If you pay them back BEFORE BK, yes, it is a preferential payment.


If you pay back before filing BK...then
If the loan is from a non-family member, then you must wait at least 90 days before filing
If the loan is from a family member, then you must wait 1 year before you can file.

However, there is no rule against paying someone back AFTER the BK is over. (This option is best)

[Judeebubzee]

Thanks HHM! One last question. Do I need to list them as a creditor when I file regardless of whether I pay them back now or after I file? They are a non-family member and they never mentioned me repaying them. It's a "gift" but it's something I want to pay them back for. I really don't want to list them unless I legally have to since BK is public record and I don't want to involve anyone in it that I don't absolutely have to. Oh, and if I DO pay them back BEFORE I file but it's much farther than 90 days BEFORE I file, is it even an issue at all? Thank you.

[HHM]

A gift is a gift, not a debt.

I still wouldn't pay them back BEFORE, it creates too much uncertainty and could involve them in your BK in a very negative way (i.e. the trustee suing them).

[Judeebubzee]

Thank you HHM! This board/forum is the best!