need some quick advice...

[trader19]

guys, i am waiting out the 12 month time-frame to clear up a preferential payment issue. however, my wife an i ran into a bit of a dilemma. she just got a new job as a teacher. she needs to go out and get new clothes for work. we want to keep in cheap so we were looking to use a 30% coupon at Kohl's. however, you need to use your kohl's card to take advantage of this 30% off. ours was shut down. so, my question is... can we have her sister make the purchase on her Kohl's card and us give her the cash for it. or, is this a preferential payment. technically, i think NO... because while we are paying her.. we are really buying the clothes from her that she purchased on her card. just want to get confirmation if this is legit and how to document it all.

[Pizza]

guys, i am waiting out the 12 month time-frame to clear up a preferential payment issue. however, my wife an i ran into a bit of a dilemma. she just got a new job as a teacher. she needs to go out and get new clothes for work. we want to keep in cheap so we were looking to use a 30% coupon at Kohl's. however, you need to use your kohl's card to take advantage of this 30% off. ours was shut down. so, my question is... can we have her sister make the purchase on her Kohl's card and us give her the cash for it. or, is this a preferential payment. technically, i think NO... because while we are paying her.. we are really buying the clothes from her that she purchased on her card. just want to get confirmation if this is legit and how to document it all.

You're just buying clothes with cash (from your sister). I imagine your creditors wouldn't even know about it, much less question it. How much cash are we talking?

[trader19]

You're just buying clothes with cash (from your sister). I imagine your creditors wouldn't even know about it, much less question it. How much cash are we talking?

yeah, but if i take out $500 from my bank... wouldn't i need to explain that cash withdrawal?

[LadyInTheRed]

yeah, but if i take out $500 from my bank... wouldn't i need to explain that cash withdrawal?

Maybe. The further the transaction is from your BK filing, the less likely it will come up. But, if it does, you'll have a good explanation. Keep the Kohls receipt and pay your sister on the same day the purchase is made. It wouldn't be a preferential payment because the payment to your sister is part of a "contemporaneous exchange" (you give her cash, she gives you clothing). Let your attorney know about the transaction in case it needs to be reported on your statement of financial affairs.

From 11 USC § 547:

(c) The trustee may not avoid under this section a transfer—
(1) to the extent that such transfer was—
(A) intended by the debtor and the creditor to or for whose benefit such transfer was made to be a contemporaneous exchange for new value given to the debtor; and
(B) in fact a substantially contemporaneous exchange;

[btbeme]

Keep a paper trail. Nothing excites a Trustee more than mysterious and unexplained cash exchanges. In this sense it is better to provide plain old boring receipts and canceled checks showing what happened. To wit: if the clothes come to $341.22, then I might suggest a withdrawal in the amount of $341.22 to pay back your sister. Just make it easy.

I know, I know...seems like ridiculous overkill. But sometimes the best explanations still need evidence.

[keepsmiling]

Congrats on the new job!
Oh and I find lots of nice new-ish clothes at thrifts all the time. Just a thought.
Also I think the number to be wary of is $600.

[AngelinaCat]

^^^ I second the above. Congratulations on the new job. I shop at thrift stores all the time. I can't remember when the last time I was in a conventional retail clothes store. You can find nice outfits still with the tags...

Yes, the number to be wary of is 600.

[AbbeyA]

I found a ton of really nice work clothes at Goodwill. She should at least be able to get several pairs of nice dress pants and button down blouses/tops at the thrift shop for FAR less than what you will spend at Kohls - even with the coupons. Start there and then supplement the additional items at Kohls that she doesn't find at Goodwill. I have work pants that are Banana Republic, Gap, Ann Klein, Cabi -- all designer stuff that was essentially brand new (some with tags still on) that were $3 each!

[keepsmiling]

Hey Trader, here in NJ we have some awesome Unique Thrift stores.
Prices vary widely but many great deals to be had. Monday is 25% off day (Thurs too, but you need to get a card for that day). Holidays 50 off but it's a zoo.
Well worth checking out and hey... tell her to leave something for me. Go when you have time, they are huge. I could spend a whole day.