Preferential Transfer???

[Xar77]

My mother-in-law that lives with us bought us a computer about 5 months ago using her line of credit with Dell with the stipulation that we pay her back. I have been making payments to her account for the 5 months directly through our checking account (payments online). we are not giving money to her for her to pay the account... we are paying HER debt directly. In June I paid $500.00 to it (so the total even for 90 days at the moment is more than $600.00). I paid the $500.00 towards it due to Birthday money that I had received from grandparents and my parents.

1. Because this is Her debt and her account and I paid HER creditor directly, is this considered preferential transfer?

2. If it is considered PT, Can the trustee go after her or are they going after Dell?

3. If they do go after Dell, will Dell simply add to the balance or will they go after my mother-in-law for the money? (if so we can try to come up with the money to pay Dell)

I'm just confused because I read that PT is considered when the debt is Mine and I pay a large amount ($600+) to that creditor... Since this debt is not mine and not technically money I borrowed from my mother-in-law I'm not sure if it applies.

Thank You

[davidb81]

The trustee can go after the money. What are your total debts you are planning to file on? Have you met with an attorney yet? Really 600.00 isn't a huge amount of money. For example when I filed, I had made payments to American Express in the prior 90 days that added to about 800.00. I thought sure the trustee would jump on that. He didn't even mention it. But keep in mind that all trustees are different. one trustee might be aggressive and the other, not so much. just be sure to explain everything to your attorney and you should be ok. Good luck! keep us informed

[Miyamoto]

I was over the $600 limit also with 2 of the 4 credit cards I listed for unsecured debts. One was around 900 and the other was about 1000 and that was the minimum payments plus a couple dollars extra I sent all of them. I was current when I filed so that is what put me over the limit. The trustee questioned me and I explained it was the minimums plus a few bucks over and I paid all of them in the same manner and I was told it wasn't worth pursuing as preferential for those small amounts. They couldn't have been too preferential anyway as 3 of the 4 cards were owned by Citi and those 2 were to their cards. Those amounts would have paid off the 4th card and then some (Best Buy with 1300). As long as you are honest and explain the situation you should be alright. Worse case scenario is the trustee seizes the money from them, but for that amount and with the increase in filings I'd think they would do like mine and say it isn't worth the effort. I couldn't tell you who they would go after if they did though, maybe a lawyer would have an idea. I had done similar in the past with my parents card at a local electronic store for no interest financing deals and I considered it a loan, but I don't know what the trustee would see it as. I did the same many months also if they had no other balance and just wrote the check myself instead of giving to them and having them write a check. Thankfully I hadn't done that for a long time or I'd be wondering that same thing as you. Please do keep us informed as I'm curious what they have to say about that situation.