Debts owed to relatives?

[niteflytes]

My mom has helped me out financially a lot and I was considering paying her back as much as I can with my tax refund because I'd rather give her the money than the greedy CC companies. I haven't filed BK yet but am thinking about it. How will paying back money owed to a relative be viewed in a BK?

Sorry if this has been asked recently. The search isn't working

Cat~

[Viper]

More info needed...

When are you going to file for BK?

How much do you owe/going to pay mom?

How much is your refund?



-Viper

[StaciMM]

Any $$ you've paid to family/friends within 1 year of filing will be taken back by the court to distribute among unsecured creditors. *Not sure if the 1 year time frame changed with the new laws!

Its considered preferential treatment, when you pay back family but not creditors.

[FilingOnMyOwn]

This is one of those things you should not be discussing with other people. Maybe one day you will be in a better financial situation, and you can help your mom the way that she helped you.

[FoolAndHisMoney]

Any $$ you've paid to family/friends within 1 year of filing will be taken back by the court to distribute among unsecured creditors. *Not sure if the 1 year time frame changed with the new laws!

Its considered preferential treatment, when you pay back family but not creditors.

It's still the same with the new laws, 1 year to insiders of $600 or more the trustee can sue her to get it back. You can give your mother $599 and pay out the rest after your case is closed and this will be fine.

[SinkingFast]

Your Mom is considered an "insider". Insiders are family, friends, and members close to you inside your business.

Any payments to any unsecured creditors or "insiders" in the aggregrate (totalling) of $600 or more, made within 90 days of filing for BK, the Trustee can go after to have returned to them.

For payments of $600 or more to Insiders, the look back extends 1 year, as FAHM already said above.

Every penny the Trustee collects to pay unsecured creditors means money for the Trustee. The Trustee collects a fee for themselves out of every payment made to creditors.

Also, we have been told by attnys, that they wanna look at bank statements and pay stubs for at least the last 6 months. Those may also be shown to the Court, I don't know for sure. So you'd have to be prepared to explain why the tax refund just disappeared if you are planning on filing any time soon.

[StaciMM]

I wanted to make a clarification here...

The $600 total over the 90 days prior to filing applies to regular creditors. That $ can be taken back by the court and distributed evenly (rather than 1 creditor getting a major payment while the others get none).

Payments to insiders automatically look back 1 year (unless it increased w/ the new laws) and the payment is supposed to be disclosed if more than $200 total to any one 'insider'.

[QUOTE=SinkingFast]

Any payments to any unsecured creditors or "insiders" in the aggregrate (totalling) of $600 or more, made within 90 days of filing for BK, the Trustee can go after to have returned to them.

For payments of $600 or more to Insiders, the look back extends 1 year, as FAHM already said above.

[QUOTE]

[SinkingFast]

Just when filling out paperwork for an attny,......

The attny had us list all payments to Creditors, including Insiders, in the aggregate of $600 or more in one section.

Later in the questionaire, in a seperate section, the attny asked for all payments made to Insiders in the aggregate of $600 or more within one year.

Many of the attnys are using the same software program to print out these BK filing questionaires. But all of the attnys are asking the same questions regarding payments to Creditors and Insiders.

That's why I said it the way I did.

Maybe it's just a wording thing on the questions.

[niteflytes]

Thanks for all the replies. It's not even an issue now. I forgot my X gets to take our daughter as a deduction this year. He has 2 other kids so this year he got 3 deductions and I got none. After recalculating my taxes I don't get enough back to worry about paying much to anyone.

Cat~

[brokentex]

Any $$ you've paid to family/friends within 1 year of filing will be taken back by the court to distribute among unsecured creditors. *Not sure if the 1 year time frame changed with the new laws!

Its considered preferential treatment, when you pay back family but not creditors.

I understand that part but why is it preferential if you are paying family loans back and still are current on credit cards ?


Example,


The last CC payments I made were at the end of Nov, and in the first part of Nov I borrowed 500 and 800 from relatives and paid them back in the middle of Nov. The money was borrowed to pay for car insurance and to fix my transmission. My lawyer still had me list them as preferential treatment but says we will be able to claim them as exempt anyway since we have very little equity in the house.

[edwards2]

brokentex...we had a similar situation. We had been paying my sister back for months before we filed and even after we filed, but it was only $100 a month so I am sure that is why it didnt send up any red flags. There are emergencies even while you are in the process of filing BK but you have to be so careful...good luck!

[SinkingFast]

Question: What happens if you are making payments to someone considered to be an insider just like the cases above; but it is for the use of something? The payments are for the use of equipment or a car?

Wouldn't that be like a lease??

Leases are considered like auto loan payments, auto leases, and rent payments. Contractually binding and not affected by the BK.

[StaciMM]

If the car is financed, it would be wise to make the payments to the lender directly. (Such as if someone got the loan but you use the car & make the payments.)

Otherwise, it would be up to the trustee as to how he/she would deal with it. Having a written agreement might help.

Question: What happens if you are making payments to someone considered to be an insider just like the cases above; but it is for the use of something? The payments are for the use of equipment or a car?