"insider" payment questions

[reb512]

I have a few instances where I'm afraid that they are going to be considered "insider" payments

If I paid an ex gf $550 in February for helping me pay off a bill in august, would that be considered preferrential, and would that have to be paid back. Also we broke up end of august haven't talked until this past feb and not since than.

Also, I live at home and I give my mom something each moth for food, rent, and utilities. I usually pay the cable bill, and in feb I gave her a $1000 to help out on bills,a nd than in may I gave her another $300 for bills too. I paid in cash and not check. do you think that these are going to be issues?

I'm in ohio. so it would be great to get someone from ohio to help answer. but all advice would be helpful

[BK2008]

Have you filed BK yet??

Seems that the $550 is past the 90 day lookback period, it wasn't an 'extravagent' expense, under the $600 limit, and it is more classified as a 'loan payback' so I don't think it would be a problem.

As far as the $$ to your parent, you are paying for normal housing expenses, and as long as you list these properly, I don't see that should be a problem.

[reb512]

I'm meeting with my attorney friday to go over everything. nothing filed as of yet. I just wanted to see what I should expect. I'm going to make sure that amount is listed as rent, utilities and such. the payment to the ex hopefully is not a problem. I would just rather keep her out of my life

[BK2008]

One of the questions is: What creditor did you pay $600 or more to over the last 90 days.....none of the above would apply. Mom isn't a 'creditor', and neithers is the ex. So there would be no reason to even bring her up.

[fltoo]

A loan payback to an insider is most definitely a pref transfer and look back can be one year or more.

I have a fraudulent transfer preventing me from filing for two years. If only I had found this forum earlier, I would have realized it.

Only problem with a pref transfer is that the person might have to pay back the money to the trustee. It does not involve you.

Saving grace here might be the amount. I don't know if the 600. amount pertains to pref transfers, also. Anyone else know??

As far as payments to mom in cash. Break it down into 200-300 increments and have mom give you a receipt for monthly "rent" payments. This is just so that you have a record of where your cash went. Has nothing to do with pref payments.

[AngelinaCatHub]

fltoo and above: We had a preferential payment to an insider. No doubt about that. The Trustee's investigative attorney has allowed us to compromise for a set amount and to pay it back to the estate. We have agreed to do this and since much of my creditor is IRS who would get this before anyone, that works for me. Pay them now or pay them later. Our host has no real problem as time and amount and cash reciepts should prove him no problem. 'Hub

[treehugger1]

Preferential payments to insiders can be an issue. Wierd things can happen.
Suppose you made the payments on a CC or auto loan for your girlfriend/boyfriend/spouse. The payments went directly from you (your bank account) to the creditor/CC. Is this a transfer or preferential payment? Legally it is, but not to your significant other. The trustee is likely to go to the creditor and request a payback into your BK estate. They cannot go to your GF/BF/Spouse as the money was not transferred to them. The trustee can request a reimbursment from the creditor.

For insiders, the look-back period is a one year (I believe,) but some states have statutes that supercede the federal BK laws. The look-back period can exceed a year.

I've heard and read about instances where the "line" between creditor and insider is foggy. Suppose you borrowed money from a friend and you both signed a repayment agreement. Is this person an insider or a creditor? If the agreement holds up under state law, then it might be interpreted as an agreement between you and a creditor and hence the 90 day rule applies. If not, then the one year look-back might apply.

Did your payments go through your bank acount? If so, the records will show large payments made to "someone." These might be questioned. In terms of paying your family $300 per month for room/board, this might be within the standards allowed by the IRS, no matter who gets the money. Talk to a attorney familiar with your state laws.

In the end, it will come down to what the trustee thinks. This does not mean the trustee decision cannot be argued against.

[AngelinaCatHub]

I've heard and read about instances where the "line" between creditor and insider is foggy. Suppose you borrowed money from a friend and you both signed a repayment agreement. Is this person an insider or a creditor? If the agreement holds up under state law, then it might be interpreted as an agreement between you and a creditor and hence the 90 day rule applies. If not, then the one year look-back might apply

Treehugger1, I paid my goddaughter 4700 dollars and my son-in-law 1230. I was in prep for a 13 and my lawyer knew about this on a paper trail in email. She did not stop me as well as in a 13, she said you can do what you want at this time. Then we had to go 7 due to job loss and health probs. Our Trustee's investigative lawyer told me even though my god daughter we adopted by choice at 41 year old and helped her, she helped us and we paid her back, he said even a good friend is considered an insider if you did not pay all the others equally. So, my wonderful Trustee, my very poor lawyer, and the Trustee's very considerate lawyer is settleling for 5k paid in lump sum on or before Feb 15, 09. We have a retirement annuity ripe after the first. As most debt is IRS, they would get it anyway. This is great as I could very well have been dismissed. At this time, I am in lymbo. 'Hub

[AngelinaCatHub]

So, my wonderful Trustee, my very poor lawyer, and the Trustee's very considerate lawyer

BTW, I meant this statement in all sincerity. We are most fortunate.

[BigJohn]

Does inside preferinetial payments include money sent for children to live on? My wife is from another country and has children from another husband. Each month we send money 'back home'. We look at it as child support even though not ordered by a court. We have keep explicit records on these transactions and the source of where the money comes from. Right now, the money comes from her pay check.

[AngelinaCatHub]

Does inside preferinetial payments include money sent for children to live on? My wife is from another country and has children from another husband. Each month we send money 'back home'. We look at it as child support even though not ordered by a court. We have keep explicit records on these transactions and the source of where the money comes from. Right now, the money comes from her pay check.

My God, Bigjohn, if any Trustee would object to that, I would consider him with no heart. I don't think they can object to a person who is bk yet gives 10% tithe to their Church. I would say, that is a MORAL responsibility and I commend you. 'Hub

[reb512]

Okay worse case scenario the trustee wants me the money put into my estate, do I have the option to add that amount to what I'm paying monthly in my chapter? over a 60 month plan that would be and extra $30 a month. Doesn't it have to be over $600 before they consider it a pref payment? Plus, all but the payment to the ex(check for $550) was was atm cash withdrawls, and it was for rent/utilties/board

[woeisme]

Not sure what part of Ohio you are in, but I am in the Southern District and have the Columbus CH 13 trustee. He is awesome, compared to all the horror stories I hear about trustees on this site! He has one of the best completion rates in the country because he allows for reasonable budgets. If you are in his district, I don't think you need to worry too much, he will definitely see that the $ given to Mom was reasonable for rent/utilities, etc. And maybe it was because our % payback to unsecured was so high, I don't know, but he didn't critically pick apart any aspect of our BK plan other than wanting a more up-to-date house appraisal and he even allowed us to include our student loan payments in our budget.

[reb512]

Woe I'm also in the southern district of Ohio as well. i live in Columbus. I hope I have the same trustee in my CH13. I've had a friend that has had the same one I think you had and he said he was really awesome, and sort of laid back. So I'm really hoping I get this same person. I would feel so much better after tomorrow if things go well.