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    "insider" payment

    I am separated from my husband. Divorce papers were filed by him in July 2011. We have been unable to come to an agreement for divorce because of the debt that is owed. There are some small assets--a boat, and a pickup truck. I put the house on the market and it sold very quickly. There was no money left over because we owed money to my dad because he help us buy the house. An in reality, we still owe my dad more money.

    Now my estranged husband tells me that he has paid the retainer to begin bankruptcy. Seems like the money that we paid my dad from the proceeds of the house, may now be in jeopardy because it was an "insider" payment. House closed November 2011. What can be done to avoid this money being taken back from my dad? Wait a period of time before filing for bk??? It was disclosed on the closing statement on the house, because we had the check go directly to my dad.

    Also, with no divorce decree, how can he claim bankruptcy on joint debt? What happens to that debt--does it just come on me then?

    This is a man that I feel I can no longer trust to do anything with any integrity.

    #2
    This is based on my logic, so keep in mind I could be way off.

    I'm guessing the house was jointly titled in your name/spouse name. Guessing the funds that paid your dad were also in both names. 1/2 of that would be considered from you, 1/2 from your ex. I'd think the 1/2 that came from your ex could be a problem. The bankruptcy trustee could ask your dad to pay that $ back to be evenly distributed among creditors. Your dad should be listed as a creditor in your ex's bankruptcy paperwork. The problem is not that you owed your dad money, but that he was being paid when other creditors were not. (If other creditors were being paid in a similar proportion, a good attorney could argue there was no preference.)

    Your ex can file bankruptcy - you can't stop that. Joint accounts would then be able to pursue you for the balance. Whether or not they would, no one can predict.
    ~Staci
    Not an attorney, and never played one on tv. My responses are based on my own experiences & personal opinions.)

    Comment


      #3
      Potentially a problem. The look back is 12 months.

      SMinGA2, raises a good point, the "argument" to minimize loss to dad is that only 1/2 of the amount is an insider preference since it is only the ex-filing. But, the trustee could argue that the payment came form assets that "would" have been part of the BK estate, in their entirety, and go after the full amount (which is probably what will happen) forcing your dad to come into BK court to argue otherwise.

      The safest route is to wait 12 months from when the payment was made.

      Comment


        #4
        HHM, would a divorce court allow a BK filing in the middle of proceedings, or vice-versa? My observation is that those Courts generally want the other to finish their business before wading in to their own action. Can one compel action - or a cessation of action - from the other?

        Comment


          #5
          Originally posted by btbeme View Post
          . . .would a divorce court allow a BK filing in the middle of proceedings, or vice-versa? Can one compel action - or a cessation of action - from the other?
          A state court cannot allow or disallow anything as it relates to bk. However, the automatic stay does not apply in a DR matter but for the division of property. See 362(b)(2)(A)(iv). Therefore, the parties can file for divorce pre or post petition but, unless the divorce is final pre petition, cannot divide joint property until the stay is lifted and the property is abandoned (remember a trustee can sell the estate's interest and the co-owner's interest in property under 363 so the property must also be abandoned).

          Des.

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