Couple of Q's

[sunflwrgrl13]

Hi all, a newbie here, just now entering into the BK world. I have had one consultation so far with a BK lawyer, but did not get a chance to ask all my questions of him. Bit of background:

1) I lost my job in late Feb. I received my last check from my job in mid-March.
2) From the consultation I learned my husband and I should not file until a least late Sept so that we can clearly show I have not had income for the last 6mo and thus qualify for Ch7.

My question is, will we be questioned about $7k that I transferred to my mother this past May? I've owed her money for a very long time (from when I was in school), and due to her money situation (just bought a new house), she needed the money from us. Should we wait at least 6mo from May instead?

Also, about a week before the consultation (approximately 2wks ago), we purchased an expensive laptop for my husband to use for school (I assume it would be deemed a luxury item since it was almost $3k). I've read we should wait at least 90 days to file, after a big ticket purchase like this. How true is this? Should we wait even longer than late Sept now so this won' appear fraudulent?


TIA

[mrskal]

I think, you may want to look into it a little further, but the payment to your mom, is considered an insider payment, and the lookback is a year not 90 days. If that is the case, and you try to file now, they could go after the money from your mom.

The computer, did you use a credit card? Pay cash?

That is what I have read, but keep researching.

[sunflwrgrl13]

We used a credit card for the laptop.

Yikes, they look back for a year? Hmmmm..I don't think my mom has spent all of the money, so would it look better or worse if she gave some of it back to us? Or would giving us some of the money back make the initial transfer look fraudulent?

[SMinGA]

Doesn't change how it 'looks' if your mom gives money back to you. Would not even count against what you repaid her, I believe. Even if she gives some back, the trustee could stilldemand the original amount in full.

An insider payment is when you are paying off debts to family & friends - but not paying off your other creditors in a similar fashion. Intent is not important. Say you owe family $10k and other creditors $40k. If you pay your mom $1k & pay other creditors $4k, it would not really be an issue because you're treating them the same. But pay a large amount to your mom and very little to creditors - its preferential.

As to the laptop - there could be problems on this also. The creditor can argue that you bought the laptop when you knew you could not pay for it, and that you bought it with no intention of paying for it. They can allege fraud based on that, and attempt to get the debt ruled not eligible for discharge. The longer you wait to file after this transaction, the better. And it would be helpful if you kept minimum payments up at least.