Preferential Payments to MIL

[Meatstick]

My wife is from the Philippines and her parents are retired and still reside there. She has periodically sent money $500 - $750 to help her parents out with living expenses and when they need regular medical care including trips to the hospital. They are in their 80's and have depended on what my wife sends them.

I probably already know the answer but is this a definite "preferential payment" ? Since we have decided to file BK I told my wife we will need to suspend the payments until we receive a notice of discharge.

We have a 2nd visit with the BK attorney we chose next week. I will present this to him but am looking for any feedback that I can get on how the TT and UST will view these payments. We havent sent any funds to them since October and stopped paying unsecured debts in November.

Any comments would be greatly appreciated.



Meatstick

[AngelinaCat]

If you are paying back a loan, it is a definite 'insider' payment because they are relatives. If you are paying the parents-in-law and none of your other creditors, then it becomes 'preferential'.

If you are simply sending money back home to help with living expenses, you *might* be able to get by with stating that these are gifts or some other type of stipend, since your wife seems to be their main source of income. You will definietly need to get the lawyer's opinion on this. Meanwhile, others more knowledgable than I about this sort of thing will chime in.

Worst case is that you may have to wait to file until at least a year has passed since the last 'gift', and that could decimate the parents.

I do feel for you; you have my very best wishes.

[justbroke]

If they are elderly parents, you can probably claim that those expenses are for the care of aging parents! There are exceptions for this and it can be a legitimate expense.

For pro se filers... You can claim money spent for the care and support of members of your family, including your parents and siblings!

Form B22A Line 35 Continued contributions to the care of household or family members. Enter the total average actual monthly expenses that you will continue to pay for the reasonable and necessary care and support of an elderly, chronically ill, or disabled member of your household or member of your immediate family who is unable to pay for such expenses

[AngelinaCat]

Thanks JB, I knew I could count on you!

[Meatstick]

Huge thanks to both of you for your replies. Hopefully it works out for the best.

thanks;


Meatstick

[whipster1]

I care for my aging (80's) parents. The trustee didn't bat an eye for the 250/mo I claimed, even though I send probably twice that.

[jribe]

care for those that are dependant on you are allowable expenses.

The trustee shouldn't go after her parent's for this money. It's not a "payment", it's help for necessities.

The only thing they may question is where this money is coming from. The trustee may assume you have enough DMI (even allowing for $250 as another poster stated) to pay money towards a 13.

My wife is from the Philippines and her parents are retired and still reside there. She has periodically sent money $500 - $750 to help her parents out with living expenses and when they need regular medical care including trips to the hospital. They are in their 80's and have depended on what my wife sends them.

I probably already know the answer but is this a definite "preferential payment" ? Since we have decided to file BK I told my wife we will need to suspend the payments until we receive a notice of discharge.

We have a 2nd visit with the BK attorney we chose next week. I will present this to him but am looking for any feedback that I can get on how the TT and UST will view these payments. We havent sent any funds to them since October and stopped paying unsecured debts in November.

Any comments would be greatly appreciated.



Meatstick

[Meatstick]

Thanks for the reply Jribe.

It is part of the Filipino culture for the children to help support their parents when they are retired and elderly. Not that it matters but my wife is in tears daily because we havent sent anything back for almost 2 months now. We have a 2nd meeting with our lawyer tomorrow and this is one issue we will ask about. Just have to wait and see where all the chips may fall on this one.


Meatstick

[DSIG]

there is a section on the means test where you enter your monthly payments made toward care for elderly (or disabled children, etc). Since there is a specific section on the means test I would consider this a safe payment

[AngelinaCat]

Just be careful. Backtoschool had her case turned into an Asset case because of two $500.00 she wrote to her mother to help with her bills, including a doctor's bill. Here is the link to that thread:

http://www.bkforum.com/showthread.php?t=46973

She also had the bad luck to get a *jerk* trustee assigned to her case.

[Meatstick]

We had the meeeting with our attorney yesterday. He informed us that the money we have sent my MIL will be considered a preferential payment by the UST if he gets involved. He said in this district that it is considered as such "UNLESS" the MIL lived in our house. However, he did state that the UST would have to hire a lawyer in the Philippines to pursue the MIL and that there was no way in hell that would happen unless there was megabucks involved, which there isn't. He said this has happened before and it will be brought up but will not affect my case as a whole.


Meatstick

[justbroke]

Just to clarify, this really depends on what these payments were. If they are regular payments in support of an sick or elderly parent (or even close family member), it's absolutely allowed. I think in meatstick's case, the payments were not regular, so it does not fit the definition.

When the payments are just random and happen every so often, it's hard to argue that it's for the regular monthly maintenance of a sick/elderly family member. Unfortunately "periodically" does not qualify.

I think that meatstick's attorney did get this correct that it would be considered an improper conveyance and it would be subject to avoidance by the Trustee. As stated, the problem is... the Trustee would need to sue the MIL in a foreign country. So much for that!

However, given what meatstick's attorney informed him that the District goes after all such "payments" if they don't live with you... is worth fighting! There is absolutely nothing in the Bankruptcy code that states that they need to be your dependent or live in the same household.