How to deal with Mann Bracken Law Offices.

[optimistic1]

Thanks for educating me on this topic, I was grossly misunderstanding it. My only defense now is that I can have the wife file a Ch.7, and then have me a file a Ch.13 later, or just let them garnish for a few months.

[albacore44]

B-boy..........would using your cash to pay your property taxes before filing be considered a preferential transfer ??

[2Bshinyandnew]

But what you are missing is that a lawsuit for a garnishment or to seize funds in a bank account or take other asset property is NOT 'preferential treatment' and a creditor can take those steps anytime prior to your filing. You need to file before this happens so you don't lose those funds. Its is not preferential treatment unless YOU voluntarily send them the money, if they have a legal means to get it all from you before you file, you lose.

Your misconception here is that when a creditor takes a legal means to recover the debt before you file for protection the trustee would view this as preferential treatment, this is NOT correct. Preferential treatment is where YOU send a creditor an amount and it is more than what would normally be a required payment. I mean look at a typical mortgage payment, they often run into the thousands every month, does that mean that since you are just keeping up on your mortgage payment it is preferential treatment? No.

But lets say you owed on your car and shortly before you filed you paid them 3,4,5 or times the monthly payment amount to pay off your car so you now own it. The trustee can look at that and say, well Optimistic1, I see you paid this creditor 5 times your normal payment. And that can be considered preferential treatment.

The law really was put in place for two reasons, one was to prevent people from paying off friends and relatives for "loans" before they filed and the other was to prevent people from paying one creditor over the others.

Example: you live in small town USA and you owe Billy Bobs Farm Supply $4000. You pay Billy Bob so as not to be embarrassed and you don't want Billy Bob to know your going to file BK. But you owe a butt load to everyone else like BoA, Amex etc. The trustee finds out you paid off Billy Bob, the trustee them takes the money back from Billy Bob, and if you didn't list you paid Billy Bob's Supply as behind paid within the last 12 months, the trustee is going to smack you around too. But the money gets taken away from Billy Bob and Billy Bob get entered as a creditor and those funds are then spread out between all the creditors.

The thing about the law that is nice is, if you make a preferential payment to a creditor (like a non-family member or friend) and you disclose this, who cares if you did it and the trustee goes back and takes the money back from them. So if you like paid off a car loan, you don't have to give the car back, the creditor is the one who gets screwed (so long as the vehicle is within your exemption amount).

wait, maybe I'm misunderstanding here...but, I understood that a preferential payment on the eve of BK, regardless of how acquired is still a preferential payment, subject to be undone by the trustee. Equal treatment of creditors is the goal. Lets say BOA gets a judgment and levies the debtors account and grabs $3K, and the debtor files BK a week later, the trustee is going to be very interested in undoing that transaction and distributing the $3K equally among the creditors. Unless the $3K was the normal monthly payment (which it can't be if it was levied from a debtors account as a result of a judgment), or the $3K was levied for a debt that is secured, all creditors get equal share of the debtors estate. An insider preferential payment is a whole additional issue. Am I reading this wrong?

http://www.moranlaw.net/preferences.htm

[optimistic1]

You see, thats what I always thought, lets hope that is the case as it will benefit me in this delay of filing situation that I am in. Thanks 2bshiny

[justbroke]

Just to be clear on everything. It is never a preferential payment when you pay fully secured creditors. (Although you could argue the whole point of preferences, but to date, no one has successfully done this according to "my" research.)

[optimistic1]

Well in my particular case, the "money" that they would take isn't going back in my pocket so to speak, however, the money does go into my plan, which is meant to pay off my back taxes, my crammed down auto, and the remainder of my attorney fees. So, I kinda would be like hahahaha, which I thought was funny by the way when you wrote that, it got me laughing.