Preferences

[confusedinfl]

I am been tryng to organize my finances as best as possible prior to filing Chapter 7. I have taken some equity out of my house and paid off all credit card debt and made an estimated tax payment on an IRA early distribution and paid taxes due on an amended 2004 tax return. The only debt left is the debt that has driven me to file bankruptcy which is a judgment from a law suit that I filed against a former business partner. Through a horrible miscarriage of justice and the fact that the former business partner was willing to perjure herself I ended up losing the case and now have a judgment for all her legal costs and attorney fees.

My question is can any of the payments to the other creditors be reversed or treated as preferences. All were valid amounts due and the payments were not for any amount in excess of what was owed. I really don't want these reversed and for those debts to be discharged. Somehow I am hoping that with a 787 pre-Chapter 7 bankruptcy FICO score and the fact that no credit card or any other debt other than the judgment will be discharged, that my credit rating might not suck too bad after this is done.

[aa06a47]

Well, they can look back for sure. 90 days is what the trustee looks back and ask for. Make sure your past that time before doing it. As long as none of your creditors are "insiders", I doubt they can claim preferential treatment.

[SinkingFast]

When did you take the 2nd on your house?? If it's been in the last year or so, the Court might take a hard look at that.

A lot has to do with when the Law Suit Judgement was awarded as well.

If you did all this financial reorganization after the Judgement, it could look like BK planning to the Court.

Put yourself in the Trustee's shoes. Here's a person who had a huge Judgement against them. Otherwise stellar credit. Relatively little CC debt. Possibly borderline equity in their home they couldn't protect with the Homestead Exemption. You go and refi your home to eat away at the equity and turn around and use the money to pay off your CC debt. And still there's this huge Judgement against you hanging in the breeze out there??!!

How does it look to you now??

Don't mean to be scary. Just presenting the other side's point of view.

Any major financial moves in the last year are subject to scrutiny. But the Court can easily look back 2 years.

[Minnymouth]

I would have a consultation with at least 3 attorneys regarding this issue and how taking the equity out of your home and paying other creditors off will affect you filing bankruptcy to rid yourself of this lawsuit.

Some lawsuits are not dismissalable in bankruptcy...... but I believe they are personal injury lawsuits.

I'm thinking that since they do have a judgment against you there are two things that they can do:

1. Garnish your wages if your in a state that allows it.
2. Put a lien against your home until the judgement is paid (only payable if your home is sold)

Yes, you do need to talk to several attorneys (bankruptcy ones).....

Keep us posted....

[confusedinfl]

Yeah, this has all been recent and most of it after the judgment came down although I had believed I would win the lawsuit and most of this planning was not bankruptcy planning, it was just concluding all my financial affairs in preparation for a move. I had planned on selling my house and living part of the year overseas and had pulled out the equity to settle all my affairs and use the remainder as a downpayment for a new home. Of course, now with this judgment against me I don't if the move is even possible. Word to the wise.....never put your faith in this country's hideous judicial system!

[confusedinfl]

Is it worth noting that the home from which the equity was taken is in Florida and I have owned that home for over 4 years therefore all the equity in the home is exempt. So basically I was taking an exempt asset and paying off debts.