Trustee questions

[rockbottom]

Hello again, I thought I was done, but I guess not. We were discharged on Oct. 7 and the trustee is still questioning some info in our bank accounts.
My question to you is, we made a house payment in March for $4,000, which was for 3 mos. of payments, Jan, Feb, March and late fees. The trustee is questioning where we got the funds for this. Most of it was borrowed from family. They gave us cash. If I answer her and say family, is she going to get my family involved? Also in April/May when we received our tax refund, we paid some of the money back to our family in cash, can she question that too.
I'm just nervous about the cash thing. I have no receipts or anything, My thinking is that they gave us cash to borrow, pay them back in cash...

any thoughts????

thank you!

[edwards2]

Family loans, etc., is a dicey thing with the trustees. My sister and brothers lent us money when my husband went through his medical crisis. I chose NOT to tell our attorney about it because I was paying my sister back monthly(she insisted - another whole story). I was afraid the trustee would notice the checks every month but she didnt - maybe because they were only $100. Did you hire an attorney? Why is the trustee questioning you post-discharge? Didnt she notice the money in your account before? I think I would be truthful. The U.S. Trustee did ask us about some checks when we had our 2004 Exam. One was a house payment, taxes, etc. She never asked us where the money came from. Did the trustee ask you about your tax refund? You did file a Chapter 7 right?

[rockbottom]

Yes, we did file ch. 7.
We do have an attorney, but she sent them a letter before the discharge, requesting items, the attorney never told us, said they never received it. so we still got discharged, but the questions are still coming.
Hopefully I'll just tell her and hope that I don't hear about it. lol
Yes, she did ask us and I have a list of what we did with it, to catch up on 2-3 month late bills. So that's okay, just worried about the cash issue.

[bkinfoseeker]

Also in April/May when we received our tax refund, we paid some of the money back to our family in cash, can she question that too.

I understand that this would be "payments to insiders" if they knew about it. You should have disclosed this on the financial affairs form. I would avoid this issue of paying back family if possible but if they ask you may have to pay this back to the Trustee for disbursement to creditors.

Question for you. How did they know about your Feb bank info? Did they ask for bank statements for a certain amount of time? When did they ask for those?

[StaciMM]

The $$ paid to family is going to be an issue. The trustee is going to want that back. Its preferential, as you paid your family rather than your creditors. So, under BK rules, the trustee can take it.

[Lightning]

You can't pay money to your family for a loan while stiffing creditors. They get it first.

[bkfiler]

why would the trustee ask about the payments to your family?

think it through and post the specifics of how the trustee would come to ask about the payments back to the family. this may help your concerns.

[StaciMM]

BKfiler-

Its actually a fairly standard question.

Our trustee even asked us. I received a workers comp settlement early in 2004 & he asked about how the money was used, and wanted to know the timeframe. It was all gone by November of last year, which was within 12 months of our filing. After I went over the general details he specifically asked if any of it went to repay family. The answer honestly was no. (But if we had paid anything to family within 12 months of filing, the trustee could have made them pay it back.)

Background*
I had a worker's comp settlement due to an accident in 2003 that led to some permanent damage to my legs and it mostly went to past due bills-catching up rent, car payments, etc. from when I was out of work & also to help cover living expenses as my income was cut when I could no longer work the 2nd job due to the accident.

[bkfiler]

my point is that the OP needs to read my questions carefully and think about it slowly. think about what proof exists that you would end up showing the trustee.

i know its not a direct answer. you never want to state a lie if asked.

[StaciMM]

I see what you're saying... Honestly, I didn't want to go there!