Preferential Payment...

[Faust]

Do preferential payments only become a concern in Chapter 7? If going with Chapter 13, are they still an issue?

Thanks!

[lrprn]

Do preferential payments only become a concern in Chapter 7? If going with Chapter 13, are they still an issue?

Pre-filing preferential payments to unsecured creditors or insiders are an issue in both Ch 7 and 13. Any payment over $600 made to an unsecured creditor during the 90 days before filing can be suspect. Any transfers of cash, assets, or properties to an insider going back a year can be suspect, even if the transfer was done innocently at the time.

Are you concerned about a payment you've made that could be considered preferential?

[HHM]

Can be a factor in chapter 13, but as with any asset issue, you can usually reconcile the problem through the payment plan

For example, if you paid back Grand Ma the $5K you borrowed and filed Chap 13 BK within 1 year, so long as your chapter 13 pays at least $5K over the 60 months, you should be ok.

[Faust]

My concern is payments made under pressure from one cc issuer over another.

[HHM]

My concern is payments made under pressure from one cc issuer over another.

Not going to be an issue. Generally, unless the preference was to insider, a preference issue is not even of concern to the debtor (you). All that happens is the trustee demands the money from the creditor and it simply goes into the BK. No big deal. A preference issue will generally not effect the other aspects of your BK.

[aa06a47]

My concern is payments made under pressure from one cc issuer over another.

The trustee will take care of this. It happened in my case. I had paid Citi around 1600 in the 3 months prior to filing. The trustee got the money back from Citi. (Weird thing, Citi didn't even file any claims...so not only did they pay the trustee money, they never got any during my Chapter 13)

[tammygirl1]

HHM,just reading back on this old thread and wondering if the trustee takes back money to redistribute, does it go to priority debts that have to be paid off before the CC's? We will have child support arrears and owe IRS so I am wondering if this money goes toward that first or to the CC's.
Thanks

[AngelinaCat]

If any money is taken back, whether from the person you made the payment to, or if you and the trustee make an agreement that YOU pay the money back, so that he doesn't have to go after the other person, that money will be distributed to the topmost creditor in your priority debt totem pole.

Example: If you owe IRS money, and you owe a student loan money, the money will be distributed to the IRS first. Any residual will then be trickled to the student loan, and so on down the food chain.

[tammygirl1]

Thanks AngelinaCat!!