Paying off a debt before filing

[Idjut]

We are filing Chapter 7 at the end of June. I am down to owing $300.00 to our orthodontist (only 2 more payments). Would it be okay to not list them? I really don't want to include them in our BK, but I'm not sure what to do.

[Pjmax]

It's probably not a problem, but check with your attorney first.

[AngelinaCat]

I don't see where $300.00 to an orthodontist would be a problem either, but do check with your attorney. It is such a small amount and you will have a history of payments in your bank statements. But you will have a record of payments to others as well. It is when one creditor gets paid, and none of the others that problems can occur.

[LadyInTheRed]

You are supposed to list all debts that exist on the date you file. Even if you list the orthodontist, you could let him know in advance that you have to list him, but that you intend to pay your bill anyway.

If you pay a creditor $600 or more within 90 days of filing, the trustee could try to recover the money from the creditor as a preference payment. So, paying $300 before you file shouldn't be an issue.

As if the point needs to be driven further : Before you make any payment, confirm with your attorney that it is okay.

[Idjut]

Thanks. If I pay the $300 before filing, it would amount to over $600 paid within the last 90 days, and I knew that would be a problem. Unfortunately, I know people who work in the ortho office personally, and I really don't want them to know. I was just going to not list the debt, but don't want to get in trouble over it. I do have a relative that offered to pay it off as a "gift". I feel bad about letting them do that, but I guess I could pay them back after we file.

The end of the month can't come soon enough, so I can quit agonizing over every little minute detail.

[Pjmax]

Just email your attorney, explain the situation, and ask if it's OK to pay.

[kawh]

Idjut, your question made me wonder: How do attorneys get by with being preferentially paid? Definitely over $600 in the past 90 days is paid, then I remembered that attorneys must have a special clause into the law to exempt them from the rule. Of course, attorneys aren't foolish enough to do the work before they are paid, like orthodontists do. It seems to me this would be like a service done and payment made extemporaneously (or one of those eously words .

If it were me, I would scheme and work to omit the orthodontist from my bk list, with only $300 remaining. But I do some stuff that is not so safe. I remember when I went into my bank bill pay list and changed the name of one of my credit cards to read 'plumber' so it wouldn't show up on my bank statement that I'd paid a credit card over $600. I had used one of the cards for necessities of all kinds, almost right up to filing and was afraid they would AP me, so I paid them under the name 'plumber.' LOL. Nobody even asked to see my silly bank statements because I was slim pickens, asset-wise.

[IBroke]

Of course, attorneys aren't foolish enough to do the work before they are paid, like orthodontists do.

When I comes to paying your attorney, I think they have to be paid prior to filing to avoid some kind of conflict of interest.

[Pjmax]

When I comes to paying your attorney, I think they have to be paid prior to filing to avoid some kind of conflict of interest.

I don't know about that, my attorney was accepting payments from a number of people just before the 341. I had finished paying him about a week before.

[kawh]

But the conflict of interest could apply some to the orthodontist, assuming you could still go there after bk'ing them. Imagine the extra tightening you'd get!

Of course you're right, it would be a major conflict. However, the attorney I ended up hiring has a website that says the reason he has to be paid first is because he'd have to be an idiot to extend us credit, since we haven't paid anyone else. He must not have heard of the Conflict of Interest thing.

[Pizza]

Idjut, your question made me wonder: How do attorneys get by with being preferentially paid? Definitely over $600 in the past 90 days is paid, then I remembered that attorneys must have a special clause into the law to exempt them from the rule. Of course, attorneys aren't foolish enough to do the work before they are paid, like orthodontists do. It seems to me this would be like a service done and payment made extemporaneously (or one of those eously words .

If they didn't, everyone would get an attorney to do the work, then discharge the attorney fees in the bankruptcy. Then the attorneys would have to file APs to get their money. That would not be very practical, would it?

(their price would go way, way, WAY up!)

[IBroke]

I don't know about that, my attorney was accepting payments from a number of people just before the 341. I had finished paying him about a week before.

Well, in that case, your attorney was one of your creditors. Funny!

[Pjmax]

My 7 was pretty simple and straightforward. He probably doesn't make those arrangements with more complicated cases, but I don't really know. He is also a trustee (not mine of course), so I'm guessing he could kind of tank someone's 341 if it came to that.

It makes logical sense that an attorney would expect to be paid in advance of doing the agreed-upon work. My point really is that I don't know if there is any firm rule or law about when it has to be paid. We need a Bk lawyer to chime in on this.

[keepmine]

Thanks. If I pay the $300 before filing, it would amount to over $600 paid within the last 90 days, and I knew that would be a problem. Unfortunately, I know people who work in the ortho office personally, and I really don't want them to know. I was just going to not list the debt, but don't want to get in trouble over it. I do have a relative that offered to pay it off as a "gift". I feel bad about letting them do that, but I guess I could pay them back after we file.

The end of the month can't come soon enough, so I can quit agonizing over every little minute detail.

That's your best option. Nothing in the bk code says you can't accept a gift. Just be sure they pay the dentist directly.

[tobee43]

Idjut, your question made me wonder: How do attorneys get by with being preferentially paid? Definitely over $600 in the past 90 days is paid, then I remembered that attorneys must have a special clause into the law to exempt them from the rule. Of course, attorneys aren't foolish enough to do the work before they are paid, like orthodontists do. It seems to me this would be like a service done and payment made extemporaneously (or one of those eously words .

If it were me, I would scheme and work to omit the orthodontist from my bk list, with only $300 remaining. But I do some stuff that is not so safe. I remember when I went into my bank bill pay list and changed the name of one of my credit cards to read 'plumber' so it wouldn't show up on my bank statement that I'd paid a credit card over $600. I had used one of the cards for necessities of all kinds, almost right up to filing and was afraid they would AP me, so I paid them under the name 'plumber.' LOL. Nobody even asked to see my silly bank statements because I was slim pickens, asset-wise.

really, you were never asked to produce bank statements? i don't know a single bk court in the US where i have heard of this? what other proofs did you have to provide of your income and output? it's always encouraged and suggested to be be as truthful and honest as possible. it's those that are not, it does end up catching up to them one way or another.

interesting, i see you comment about your atty, why would hire someone with a straight off attitude?