Ms E

[edwina53223]

Hello I have a Question. I received a loan from my son to pay off a loan. He doesn't live in this state so he used cash app to send me the payments every month I paid him one payment back in march. Will these payments count as income on the means test

[justbroke]

Welcome to BKForum!

Payments on a loan are not income. The problem may be that you made preferential payments to an insider -- your son -- over other creditors.

[edwina53223]

I didn’t make preferential payment to him I paid him one payment. The problem was I couldn’t afford to pay him back because I was paying my other creditors

[justbroke]

I didn’t make preferential payment to him I paid him one payment. The problem was I couldn’t afford to pay him back because I was paying my other creditors

Whether something is a preference is whether or not the insider--the son--received money over other creditors. Paying an insider creditor, such as your son, in one payment and not paying other creditors is the definition of a preference. If you just paid him back in March and you're filing bankruptcy now, then it appears that you paid the insider son over other creditors. I can't figure that out for you but you will need to be prepared to answer that question. The lookback for an insider is one (1) year.

The payments will not be counted as income. There is, however, a question on whether that is a payment to an insider. You must disclose those payments to the son on your Statement of Financial Affairs (SOFA). Whether or not the Trustee questions the payments is too fact-specific.

[edwina53223]

Thank you