My husband and I recently took a loan from our 401Ks to help out. We have been living paycheck to paycheck for some time. We were going to use this money to pay off the car and pay down our mortgage. We have recently gotten "screwed" by one of our credit card companies and raised our interest rate from 4.9% to 28.5% for being one day late on a payment. We called a lawyer and talked to him about filing BK. We used one loan to pay off our car and some other items. What is left is about $19K. Should we pay it on our mortgage or would this be fraud if we file BK in the next couple of months?
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Originally posted by Driven21 View PostIf I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010. -
Payments to a fully secured creditor are NOT preferences because the creditor didn't get more than he would have in bankruptcy. Also, I don't think pref payments are considered fraud, it just allows the trustee to avoid the payment and really has no bearing on the filer.
Think about those of us about to file still paying their mortgage and car payments.
Now, I don't know about paying huge amounts to these secureds being fraud, so maybe someone else will know and chime in.Comment
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The trustee asks at the 341... "Have you made a payment in excess of your monthly payment on your mortgage?"
In this case, the answer would be yes.Comment
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So, what are the ramifications from doing this? Can the trustee avoid this extra money as they do with pref payments?Comment
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Possibly, not sure. They ask the question though.
It could also be looked at as putting money in an exempt asset. If the home is exempt.
Best thing to do would be to pay back the 401k. That is where the money originally came from so it wouldn't be as big of a red flag.Comment
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