Confused about 90 Day Stay Rule - From The Creditor's Side

[BaseballFan2004]

[keepmine]

That will be up to the trustee. Unless it's several thousand dollars, they likely won't bother.

If you refuse to give the money back, the trustee has the authority to sue you for the return of the funds.

[diviaruba]

Under 547(b)(4)(A), garnishments when wages are earned during the preference period (in the 90 days prior to filing), and the transfer of those wages pursuant to a garnishment order is avoidable by the trustee, usually in the amount over the $600 preference limit. Wages taken after the filing, in violation of the automatic stay, will be required to be returned to the debtor.

[JollyGG]

Assuming that we are talking about an amount large enough to make it worth the creditors time, and assuming that the trustee decides that this is a preferential payment.

You will:

1. Recieve a letter from the trustee demanding you turn over the funds.
2. Have an opportunity to file a claim to get "your piece of the pie"
3. The trustee will divide the money recieved from assets, other preferential payments, and your preferential payments. Then once all assets are collected and all claims are filed the trustee will determine how much money each creditor gets. It will usually be a flat percent to unsecured creditors (ie. all creditors get 10% of the amount of their claim)
4. Creditors who filed claims will get paid.

[sisterfunkhaus]

I don't understand why a creditor is being given information here. Isn't this a BK support board? This post makes me feel very unsafe here.

[oldrocker]

I don't understand why a creditor is being given information here. Isn't this a BK support board? This post makes me feel very unsafe here.

Calm down sis, this is not the first time a credtor has asked about their rights (even in my short time here) on this board. This person was just told what they can expect during the bk process. Nothing more nothing less.

[keepmine]

I don't understand why a creditor is being given information here. Isn't this a BK support board? This post makes me feel very unsafe here.

No need to feel unsafe. We didn't give him the 'keys to the Kingdom". We just basically told him he's pretty much screwed.

[JollyGG]

Anyone is welcome here as long as they follow forum rules and are respectful.

All this board is about is giving information about the bankruptcy process from our own experiences and studies.

We all know that there are creditors that got hurt when we filed. Regardless, most of us had little choice. We made a buisness decision for the good of our families. As long as they follow the rules our creditors are entitled to their own buisness decisions for the good of their bottom line and families as well.

Additionally, I get the impression that this creditor is a smaller, independent creditor. The type of creditor who can least afford the loss. If there are going to be assets discovered he has a right to put in a claim for his piece of the pie. He already knows that he can't do anything about the bankruptcy and hasn't asked for advice about how to mess with the debtor or her bk. He just wants to protect as much as he possible can.

[Flamingo]

I don't understand why a creditor is being given information here. Isn't this a BK support board? This post makes me feel very unsafe here.

You need to realize that the entire internet community can view this board without joining. So if someone just wants to watch what is discussed in here, unless this board is made private anyone can view postings in here. It's always best to remain anonymous and not divulge too much information about yourself on any forum or discussion group on the internet due to that.

[HHM]

JollyGG summed it up pretty well.

1. You only need to turn over the funds if the trustee demands it. Since you have had only 2 months worth of garnishments, I doubt the trustee will do so (but you never know). If you refuse, then the trustee can sue you in BK court.

2. As for who gets the money, the trustee. The debtor does not get the money back.

3. Because of the automatic stay, you need to withdraw the garnishment from the debtor's employer. Any money you receive from a paycheck that was "issued" after the date this person filed BK must be returned to the debtor.

4. At some point, the trustee will make a determination as to whether this debtor is an asset or no-asset case. If it is an asset case, you will get a notice in the mail requesting that you file a proof of claim. Filing a proof of claim is a simple matter, download the form from your local BK court website, attach a copy of the judgment, and file it with the court. If the debtor is pushed into a chapter 13, you will also need to file a proof of claim.

5. If the debtor's bk is designated a no-asset case, then your claim against that person becomes void unless your claim is excepted from discharge under Section 523 of the BK code. You would need to file a Motion with the BK court and have a mini trial to determine if your claim fits one of the categories.