Is this considered a preferential payment?

[southernbelle]

As most of you know, I was behind on my 2nd mortgage and paid the past due amounts owed on cross coll. loans to that bank before they started to foreclose on my home. The total payment was over $700 (I used money set aside to pay the atty).

When the debt was incurred, it was unsecured, but the cross coll. clause makes it secured through the 2nd mortgage. Would this be considered a preferential payment, would this seem like fraud to a Trustee or would I have to supply them with a copy of the mortgage agreement to prove the cross coll. clause exists?

[HHM]

With Preferential Payments...

First, Pref-Pays only apply to creditors within the same class. Thus, it is NOT a Pref-pay to pay a secured creditor over an unsecured creditor. Thus, you can pay your car payment "in preference" to your Chase Visa. What you can't do is pay your AMEX in preference to your Chase Visa.

There really is no "secured" issue and Pref-Pay because secured creditors have recourse the the leaned property so they have inherent protection, so you can pay you car payment and not make your 2nd mortgage payment etc.

Thus, I don't think what you did would be considered a pref-pay.

[southernbelle]

Thanks again HHM. That's a relief. You guys need a tip jar.