Opting out of Chapter 7 - Help

[NoName]

If you retain an attorney and later decide that you do not want to file, is that possible?

What happens at that point? Will creditors allow you to set up payment plans with them or will they sue you.

Here is my situation:

I retained an attorney about 18 months ago. But because of life events have not filed yet. We have not made payments on those accounts the entire time. But some things have come up that make me not want to file. Specifically, I am worried that the trustee will pursue a law suit against a relative for preferential payment. I can not do that to them.

Also, my financial situation has improved, and I may be able to make payments, if I can set them up.

What do you think?

Thanks!

[HHM]

If you don't want to file, you don't want to file.

But, you are probably out any money you paid the attorney, and to be honest, after 18 months, the retainer is probably no good anyway.

[NoName]

If you don't want to file, you don't want to file.

But, you are probably out any money you paid the attorney, and to be honest, after 18 months, the retainer is probably no good anyway.

I actually just met with the attorney last week. The retainer is still good. They are preparing to e-file my petition. But, I just found out about the preferential payment problem. I told the attorney about the payment that we made to our relative, but he didn't seem to think it was important. But after reading the forum, I see that it clearly is a preferential payment (I just didn't know that it was at the time). We made the payment about 6-7 months ago and it was over $1000.

I just can not do that to our relative. However, I am very unsure as to what will happen if decide not to file. We don't have the money to pay the creditors. The debt is rather large.

This situation really stinks.

[SinkingFast]

If this is a relative you can talk to about your financial situation,........... ie, that you're filing BK,................. Then explain to them what might happen.

That the Trustee may come back to them for the money you repaid. If that happens, once your BK is over and done with, you'll repay the money to them.

There is no law saying you cannot voluntarily repay any Creditor. You can just pay them back, again, after your BK is done.

[CindyLou]

There is always a work around. Just be honest and up front about the situation. I certainly wouldn't let just this be the deciding factor.

[NoName]

There is always a work around. Just be honest and up front about the situation. I certainly wouldn't let just this be the deciding factor.

Well, I don't see any way around it. If the trustee pursues this money, there is no way for this relative to pay it back. So that would result in a judgement against the relative.

[HHM]

How much money are we talking about, and what was it for?

[NoName]

How much money are we talking about, and what was it for?

I just spoke to my attorney. Here is the deal. He is going to call it an advance on an insurance settlement. So there should not be any preferential payment issues.

We needed $1400 to payoff my tution so I could get my degree - which was needed for my new job. So, my relative lent us the money with the understanding that she would be paid back as soon as the settlement arrived. About a month later the settlement check came and we repaid the relative.

[HHM]

Ok, what was the insurance settlement for...(you will need an exemption to cover this).

But even then, it is still probably a preferential payment because the relative is not differential situated than your other unsecured creditors. You may be ok if you have good documentation about giving the relative a security interest in this insurance settlement, but the court may not allow it.

I am just giving you a heads up to not be surprised if this issue goes south on you...I hope nothing comes of it.

[NoName]

The insurance settlement was for an auto accident was wife was in. We received the check about 8 months ago and repaid my relative a week later. The rest of the money was spent on monthly bills when I was transition from one job to another. So all of it is gone.

[HHM]

The insurance settlement was for an auto accident was wife was in. We received the check about 8 months ago and repaid my relative a week later. The rest of the money was spent on monthly bills when I was transition from one job to another. So all of it is gone.

Of course it is all gone, but what you really need to ask your attorney is whether the funds can be exempt, since these types of settlements become property of you BK estate. Even if it was exempt, you owed your relative money and paid them in preference to your other creditors, that is a trustee's gold mine. And by all accounts, I don't see how your situation would not be considerd a preferential payment by a clever trustee.

[steve_d]

Was there anything in writing with that relative? Like a loan agreement? If not, I wouldn't even mention it. Did you pay your relative with a check? If not, no one will ever know. I owe my mother money and pay her in cash. She also deducts from what I owe for birthday, xmas and other "gifts." Was there any event around that time you could say it was a gift for your relative? If there's no way for the trustee to prove it was payment on a debt, why even bring it up?

[jal1129]

Because one of the questions you have to answer under oath is "Within 1 year of filing your bk case have you made any payments to friends or family members in excess of $1,000."

[steve_d]

Because one of the questions you have to answer under oath is "Within 1 year of filing your bk case have you made any payments to friends or family members in excess of $1,000."

Yeah, "payment". Doesn't say anything about gifts, or hell, maybe you lent them that money.

[keepmine]

I don't think many people will advocate lying in feeral court.
The trustee will also ask if you have anyone that owes you money. Any payment to an insider within a year of filing must be disclosed-makes no difference if it was a loan or a gift.
The OP has delayed filing tis long-maybe waiting another 4 months is doable.