Pro se with preferential payments within 90 days

[sdedalus83]

I am going to be filing for Chapter 7 pro se in Houston TX next week and have a couple of concerns regarding payments made within the last 90 days.
My son made a payment of $1300 to my HOA to establish a repayment plan for past dues. I made his next three car payments to pay him back. At the time, I wasn't intending to file, so I hadn't done any research on how that would impact the case. The payment to the HOA was drawn from his checking account, while the three car payments were drawn from mine.

I also make a payment every month to the administrator of my debt management plan, but that is only distributed to some of my creditors. Most of the others declined to participate.

I would stop paying the DMP and wait until the car payments are more than three months old, but my lender denied a modification and a short sale and I haven't been able to find a buyer since the house is underwater. Now I have a week and a half to postpone the foreclosure. Chapter 13 isn't an option due to declining income.

What kind of response can I expect from the trustee regarding these payments? What documentation should I provide at filing and what should be witheld until the trustee asks for an explanation?

Thanks for any assistance.

[justbroke]

The money to payback your son is an insider preference and that is subject to at least a 1 year review. Since $1,300 is a decent amount of money, the Trustee is likely to pursue this preference or ask you to settle with them. This is where having an attorney will come in handy.

The real thing about preferences are that they go after the preferred creditor, not you.

Because the Trustee may seek to recover against the "insider" (family member, friend, etc), there is usually pressure on the debtor to reach some agreement; but you don't need technically need to worry. While it would be "sticking" it to your family/friends, the Trustee would sue that person to recover the asset (if the person refused to turn over the property/money).

Nothing should ever be "withheld"!

That bears repeating, Nothing should ever be "withheld"!. Withholding information can be a serious issue and result in criminal penalties. Never do anything to hinder, delay, or defraud the Trustee, U.S. Trustee or the bankruptcy court. It's just not worth it, in the end. In fact, you are required to fill out a Statement of Financial Affairs (SoFA) which details pretty much all of your financial life as many as 10 years or more. Purposely withholding information could subject you to have your case administered normally -- liquidated -- yet no debt would be discharged! You'd still owe and could be refereed to the U.S. Attorney for criminal prosecution. So just don't do it. (Okay, no more doom and gloom from me!)

Your debt management plan would also be disclosed and I believe you actually need to file a copy of that DMP with the Trustee. (I could be mistaken but I think they review it to check for any preferential payments.)

[LadyInTheRed]

The DMP payment may not be an avoidable transfer:

From Section 547 of the Bankruptcy Code:

(h) The trustee may not avoid a transfer if such transfer was made as a part of an alternative repayment schedule between the debtor and any creditor of the debtor created by an approved nonprofit budget and credit counseling agency.

http://www.law.cornell.edu/uscode/text/11/547

[sdedalus83]

Thanks to you both.

I didn't mean witholding to defraud. I'm just trying to find out what information I should provide to explain the payments beyond what is requested by the court at the time of filing. Would the trustee expect the full $1300 or the $700 in excess of the $600 allowed?

[justbroke]

Thanks to you both.

I didn't mean witholding to defraud. I'm just trying to find out what information I should provide to explain the payments beyond what is requested by the court at the time of filing. Would the trustee expect the full $1300 or the $700 in excess of the $600 allowed?

Look at the Official Form B7 -- Statement of Financial Affairs. It's pretty detailed.

Instructions

Form B7 Statement of Financial Affairs (04/13)

(These URL's were current as of Feburary 20, 2015)

[LadyInTheRed]

Thanks to you both.

I didn't mean witholding to defraud. I'm just trying to find out what information I should provide to explain the payments beyond what is requested by the court at the time of filing. Would the trustee expect the full $1300 or the $700 in excess of the $600 allowed?

The full $1300, I believe, based on how I read the law.