Motion to Compromise / Filing an Objection?

[BeachNut]

After months of being unemployed with no income, I finally landed a job. My first paycheck was two weeks away. I was behind on rent and utilities and the current month was due. I sold my truck for $4000, but the buyer's wasn't getting his money for a week. He gave me a deposit. My father sent me $2000 to pay the bills, knowing I could repay him in a week when I finalized my sale. i finalized my sale and repaid my father in a week. The other $2000 from the sale I used to purchased a car which my neighbor was selling.

Now, the Trustee sent me a Motion to Compromise, ordering me to also pay the Bankruptcy Estate $2000 over ten monthly payments. When I called him to question him about his motion, he explained to me about preferential payments, and sarcastically told me I should have hired an attorney and I would have known. I told him that if I could have afforded one, I would have done so. I responded by asking him if he had a "rock in his craw" toward people who file Pro se? He said no, but "that's what happens when people don't hire attorneys.

Is it worth the hassle to file an Objection to the Motion, or should I just bite the bullet and pay the payments? Thanks for any advice!

[AngelinaCat]

When did you file? When was all this transaction of money? Yes, this has the appearance of preferential payment. You cannot pay back any one creditor without making payments to all of them. That is what the $2000.00 to your father looks like.

We had a similar situation and we HAD a lawyer--not a very good one it turned out. We also had to make monthly payments back to the BK estate of $450.00 a month for a year--our total was $5,000.00

The Motion to Compromise is actually a good-hearted gesture on your trustee's part. If you don't choose to pay the BK estate back, then he will go after your father for the $2,000 in what is called an 'Avoid the Transfer.' It would have been well if you and your father could have waited until after your Discharge, for you to pay your father back.

Believe me, we have been right where you are. Though we had an attorney, we might as well have been pro-se. We also did not find this Forum until well after we had filed with all of our mistakes.

Good luck to you, and welcome to the Forum.

[frogger]

Is it worth the hassle to file an Objection to the Motion, or should I just bite the bullet and pay the payments? Thanks for any advice!

Bite and start chewing...........

[justbroke]

Is it worth the hassle to file an Objection to the Motion, or should I just bite the bullet and pay the payments? Thanks for any advice!

You should compromise and work on a repayment plan. What you did is the classic definition of a preferential payment. Not only that, it's an insider payment.

It is true, you should have known about preferences before filing. This is one of the top areas that Trustees find money for the Estate. This is why I suggest that pro se filers with property issues -- including selling or transferring property -- should at least consult some attorneys to ask about the implications.

Anyhow, the Trustee is being nice to offer a payment plan. You could counter and ask if you can pay over 12 months, and reduce it to $1,600 (20% discount). It would cost the Trustee more to pursue it anyhow, and the Trustee would be going after your father, not you. (Which I find it kind of nice, but not so proper, that the Trustee went directly to you for the money... unless you had discussed it with the Trustee before that you didn't want to have your father repay.)

This is precisely where a good attorney comes into play since they can negotiate with the Trustee and remind the Trustee that his costs to recover $2,000 from the dad is only worth $1,600 today. Without that type of skill and confidence that an attorney has, the Trustee will have much more control over a pro se debtor. (Not that an attorney wouldn't advise you to settle with the Trustee anyhow, since it costs money for an attorney to litigate against the Trustee.)

Just my observation.