Question Before Filing

[Fargo]

Hi everyone,

It's my first post here. My husband and I have decided to file for Chapter 7 Bankruptcy in a few months. We used credit cards in December so we are waiting for time to pass before we file. It was mainly necessities, not luxury items. I have been unemployed for the past two years and I was sick for a year of that. With the medical bills and loss of income, we have struggled to make ends meet, we actually aren't. I've read a few places that if you owe a family member money that you must disclose that as well. My husband has been paying his Mom $100 per month for the past several years and still owes her money. I've read where it states you should stop paying the family member because the trustee can take that money from the relative to pay creditors. I am so confused on this subject. I've read where they can take it for the period of one year from date of filing. His mom counts on this money every month so I just don't want us to stop paying her. Is there a specific amount that the trustee looks at?

[keepmine]

No specific amount. Mom is an insider and if the trustee wants to, he can sue her for the return of any money paid with a year of filing.
The amount involved may not be enough for the trustee to bother with. Ask your lawyer how agressive trustees in your area are.

[btbeme]

Fargo, a Trustee can look back as long as 12 months for an "insider preference" and demand that money back from the relative. Generally, that is not the case, because the petitioner (that's you) typically has the opportunity to prevent that from happening by negotiating a fair settlement with the Trustee. As above, your attorney can advise you on how aggressive the Trustees are in your area, but the worst case would be for you to have to make good for some or all that has been paid. Which means stop paying now and wait as long as possible to file.

It is rare that I have seen a Trustee reach back more than 9 months, or any further than when they deemed the petitioner had the means to pay their bills. In almost every case it was for significantly more than $100 a month. Your attorney will have to make the case with the Trustee. Trustees are human, but they have a job to do, too.

Kinda gray here, but the first order of business is to apologetically stop paying. Nothing says you can't pay after your discharge. And, yes, Mom has to be listed on your filing.

[mountanddo]

And, yes, Mom has to be listed on your filing.

Technically maybe but I didn't list my daughter when I filed and I owe her about $1000. I am paying her back with what, I can when I can until I pay it back. I didn't see any benefit to listing her as I am not looking to get the debt I owe her discharged. I borrowed it more than a year before I filed and I just started paying her back after I filed with whatever money I can scrape together after my expenses, which isn't much.

[SWConsultant]

I agree with mountanddo. If you intend on paying her, dont list her as a creditor. Technically you probably should but people miss unsecured creditors on filing all the time and creditors not listed are not discharged.

Further, for $100/month the likelihood of a trustee having an issue with this is almost 0. Reason being: SHE IS YOUR MOTHER-IN_LAW. Trustees are human. They know that you will take care of family and at such a low amount you coud simply go to an ATM once a month, pull out $100 and hand it to your Mother without anyone being the wiser. It is simply too low of an amount for a trustee to concern himself with.

While I dont practice law and do not know the trustees in your area, it seems not to be an issue at face value.

[SweetGeorgia]

If she depends on the money, I would actually call it "family member support." It sounds like you treat it as a regular expense-type payment rather than a debt-type payment.

Good luck, and welcome!

[AngelinaCat]

I Further, for $100/month the likelihood of a trustee having an issue with this is almost 0. Reason being: SHE IS YOUR MOTHER-IN_LAW. Trustees are human. They know that you will take care of family and at such a low amount you coud simply go to an ATM once a month, pull out $100 and hand it to your Mother without anyone being the wiser. It is simply too low of an amount for a trustee to concern himself with.

This situation is a perfect example of an 'Insider'. If you are paying your MIL and not any of your other creditors, then it would be a 'Preferential Insider.'

Yes, the trustee can seek to 'Avoid the Transfer' and and go after your MIL to recover that money. If that happens, you would likely have an opportunity to arrange a settlement with the trustee to pay at least part of that money back to your BK estate.

Now if your MIL is depending on this money each month to live, keep on paying her, but make sure it is somehow stated in your paperwork that this is for her 'Maintenance."

And the $100.00 per month wouldn't be the trigger, it would be the total of $1,200.00 in the year's look-back. The trigger is usually $600.00 or more. However it can be less. One poster paid $500.00 of her mother's medical bills, and then several months later, paid another $500.00 toward mother's medical bills. This poster's trustee went after that money, and SHE had to pay $1000.00 to the trustee to keep him from going after her mother.

If you have an attorney, PLEASE discuss this situation thoroughly with him/her and make sure you understand it.

Good Wishes to you.

[Fargo]

Hi everyone,

Thanks for the welcome and replies...!! Yes, my MIL depends on the money. She has been very ill the last few years and it helps her get by. A large chunk of her social security goes to medical bills and prescription costs. I guess it depends on how the trustee will look at it. My husband borrowed the money several years ago so it's nothing new. It is something we will discuss with our future attorney.

We met with one this past week but neither my husband nor I really cared for him. He talked over us instead of answering our questions. We were more confused after we left the appointment. A friend recommended an attorney she used to file bankruptcy. I checked out the lawyer's website and I am going to call her this week. This seems like a good lawyer. We have come up with a list of questions thanks to the forum. We will just see what the lawyer says. We both plan to be up front and honest about everything.

I am just grateful for this forum. It's nice to have some place to discuss these things with who have been there before us or are going through it at the same time. It was a difficult decision to come to after months of thinking about it. We realize it's the best thing for us to get a fresh start in life. It's nice to know we aren't alone.

[basketsbears]

Hi,

I was wondering if you could purchase food for roughly $100 for your MIL? I am not an expert by any means, but if your future attorney says you cannot/should not pay her money, perhaps that would be a way to help her.

The experts here are wonderful! Welcome!

[MarkCantaur]

You might be able to simply hand her some cash money now and again, or go and pay a bill or two. But if you have a history in your checking account where Mom gets 100.00 every month, and that paper trail suddenly stops, that will raise an eyebrow or two...

[Fargo]

You might be able to simply hand her some cash money now and again, or go and pay a bill or two. But if you have a history in your checking account where Mom gets 100.00 every month, and that paper trail suddenly stops, that will raise an eyebrow or two...

Hi Mark,

That is one of the first things I thought of if I just stopped suddenly paid her. I don't want to hide anything. I contacted the lawyer today and we have an appointment with her next Monday afternoon. They are sending us some information to fill out before the consultation. It's a step in the right direction!