Preferences and Transfers

[Willy13]

My dilemma. Early 2008 I took out several 0% cash advances, on my cards and a few cards that I am an authorized user on, and put the money in a joint checking account. I share this account with the owner of the cards I am the authorized user on. From there I put money in my own brokerage account and lost a lot of money in the stock market. After I had enough of the stock market, I put what was left in my brokerage account back into the joint checking account. Around $40,000 was then paid back on the cards I am the authorized user on; this was the money that was transferred out of those accounts. The largest single payment was around $12,000. These cards were paid directly from the joint checking account. I owe over $60,000 on my own cards and I have enough money to make minimum payments for about 1 year. I will owe over $50,000 when I run out of money unless I can find a new source of income. How will this look in a bankruptcy? There is no way to get this money back if these credit card payments are not allowed. I knew nothing about bankruptcy, preferences and fraudulent transfers when all this happened a few month ago. I'm so afraid the trustee would come after the other person for that money even though that money really belongs to that person, actually it belongs to the banks of the other person. I only had that money in my posession a few months. I am more than willing to ride out creditors and judgments against me if it keeps the other person out of it. This is a real mess I am in. I will see an attorney as soon as possible. My nerves are shot after reading up on some of this stuff.

[fltoo]

I don't see any preferential payment or fraudulent transfer in anything you did.

You might want to separate all finances from this other party and ask the attorney how long you should wait before filing.

[PoorGrammyinBK7]

If you "paid back" another person (friend or relative), without paying other creditors, the look back period is 1 year for insider preferential payments I believe.


Transfers to friends/family is longer - at least 2 years, I think.

Not sure if this applies to what you did - maybe someone else can help you here.

[fltoo]

There is another thread active regarding this.

Insider preferential payments, (made to family, business associates, etc.) have a 1 year look back. As Grammy stated, it is when you pay an "insider" and not a creditor.

Fraudulent transfers have a 2 year look back. I am under the assumption that it doesn't matter to whom you transfer.

But, again, depending on the state, trustee can look back longer if he suspects fraud.

But, I don't see either one in your scenario.

[Willy13]

I guess the question is. Is the money I transferred considered an asset since it was never really mine but borrowed and returned after a few months. Would it have to be listed as a transferred asset on the bankruptcy form where it asks for transferred assets in the last two years. One lawyer site, for my state, said they ask you that question at the 341 but they ask for the last 3 years per state laws. I can easily make the 1 year preference period so I am not worried about that if that is all it is. It's just the more you read on this subject, the harder it is to distinguish between the two types of payments when it concerns insiders. I'm still not sure if this could even be considered a standard preference since the payments went directly to credit cards I use and make payments on as an authorized user.

Thanks for your replies. Anything positive right now really helps. I have so learned my lesson when it comes to credit. I have not touched my cards since I called it quits after the stock fiasco. I’m just making minimum payments now which I have done for about 8 months now. Like I said, I can go at least one more year doing that. Hopefully that will be enough to keep Creditors from objecting as some of my personal advances were large. They should teach basic Bankruptcy law in schools so people don't learn these laws the hard way after the fact and after mistakes are made.

Thanks once again