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Preferential Payment To Family Member and Chapter 13?

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    Preferential Payment To Family Member and Chapter 13?

    Hi--

    I have a preferential payment to a family member now that I cannot avoid.

    I have been told by one attorney that I have to wait 1 year.

    I was told by another that I don't, but that I have to account for the $12,000 somehow. I guess it gets folded into my plan. He won't really answer detailed questions unless we hire him.

    Does anyone know if bk is out of the question for a year if we declare Chapter 13 because of this payment?

    Thanks!

    #2
    My understanding is that at least the value of the pref. payment (+ any non-exempt assets) needs to go to unsecured. So if you have $12,000 in pref. payment, then at least $12,000 needs to go to your unsecured creditors in your plan.

    That would be in addition to priority debts. Priority would be secured debt, mortgage arrears, taxes. I am not sure if it counts what goes to the trustee?

    Example: if you had $10,000 in mortgage arrears and no other priority debts and a 10% trustee fee then you'd need to pay at least ($10,000 + $12,000) / .90 into your plan. Dividing by .90 accounts for the trustee fee. In this example, you'd need to pay at least about $24,445. So over 36 months that would be $679 or $408 over 60.

    It becomes a real problem if there is not enough room in your budget to pay enough to cover priority, trustee fee, and preferential payments.
    Get mortgage modified: DONE! 7 months of back interest payments amortized, payment reduced over $200/mo
    (In the 'planning' stage, to file ch. 13 if/when we have to.)

    Comment


      #3
      Originally posted by SMinGA View Post
      My understanding is that at least the value of the pref. payment (+ any non-exempt assets) needs to go to unsecured. So if you have $12,000 in pref. payment, then at least $12,000 needs to go to your unsecured creditors in your plan.

      That would be in addition to priority debts. Priority would be secured debt, mortgage arrears, taxes. I am not sure if it counts what goes to the trustee?

      Example: if you had $10,000 in mortgage arrears and no other priority debts and a 10% trustee fee then you'd need to pay at least ($10,000 + $12,000) / .90 into your plan. Dividing by .90 accounts for the trustee fee. In this example, you'd need to pay at least about $24,445. So over 36 months that would be $679 or $408 over 60.

      It becomes a real problem if there is not enough room in your budget to pay enough to cover priority, trustee fee, and preferential payments.
      Perfect analysis.

      Comment


        #4
        Thanks to both of you.

        That was what I suspected based on my 15 minute phone consult with the lawyer. He didn't want to go into details.

        So I can declare Chapter 13 at any point. Now I have a second question, which you might not know the answer to.

        The payment is to my father. Will I have to prove it was the payment of a debt and not a transfer of assets? Because I cannot have my father know that I am declaring bankruptcy.

        I could sort of prove it somehow because of a car purchase that I made. I think I can prove I purchased the car as a result of my car accident. My father paid for this and I am paying him back out of the damages I got from my head injury during the accident.

        But I don't know if I have to get some kind of affidavit from my father? That will not be possible.

        Comment

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