preferential payments

[sofarindebt]

Sorry so many questions!!! I am losing sleep at night and it seems I am making so many mistakes, I think my atty. is annoyed with me.

I have 2 outstanding payday loans. One is for $650 and the other $950. We plan to pay them off this month but that will delay us to file for 90 more days due to preferential payment. can I pay each one like $400 at a time, or is it only a "lump sum" payment of $500 or more? For example, if I pay one payday loan $400 and then the next week another $400, will they look at it as I paid them $800 within 90 days, or does it have to be a lump sum?

Thanks everyone for all the wonderful advice on this forum!!

[BK&Filer]

why paying?

If ever there was a creditor that deserves to be included in bk it is payday loan companies. Why would you want to pay them before filing. The preferential payment refers to the total amount paid to a single creditor during the time period, regardless of how many payments it is split in to. The trustee would be the one seeking to recover preferential payments from the creditor - so it really isn't a problem for you (except it may complicate/drag out your case)

[sofarindebt]

answers to your question

Well because they auto=deduct $160 every week if I extend it, so by the time I filed, that is $160X12 weeks, uh, I would rather pay them $900 and get if over with. Plus it is considered a cash advance before filing and it woudln't be discharged anyway. I don't want that complication either. I will just wait 90 more days.

[SinkingFast]

It's $600/Creditor/Line of Credit paid "in the aggregate", or total, within 90 days of filing.

So your plan to split the payments,........... As per your example $400 one month and then the remainder the next,...............

If you pay the first installment in December, and the 2nd installment in January, you're gonna have to wait at least 90 days beyond the December payment to bring you below the $600 Preferential Payment level. Otherwise, you'd have the whole amount paid showing and it would be in excess of the allowable $600/Creditor.

I was unaware that a Pay Day Loan is considered a Cash Advance. I thought that just referred to actual Cash Advances taken against LOC's on CC's.

[9877donna]

I was unaware that a Pay Day Loan is considered a Cash Advance. I thought that just referred to actual Cash Advances taken against LOC's on CC's.

I agree SinkingFast. I don't think Pay Day loans are considered a 'cash advance'.People include them in their BK's all the time with no problem.
Maybe this is something you want to ask your attorney?Why pay them back if you don't have to??
Good luck to you sofarindebt.
Donna

[sofarindebt]

like I said, it gets deducted automatically from my checking account

so I have no choice to pay them off early, or I lose money.

[sofarindebt]

PLUS, on the application for a payday loan it says (m)

I have not or do not plan on filing bankruptcy in the next 6 months, that would be fraud since I already paid my retainer fee and I knew I was going to file.

[HHM]

If the payday loans are "originally" taken out within 70 days of filing BK, then if the amount is high enough, it is probably a cash advance...however, the renewals don't count. The Payday loans try to make it seem like you are taking out a new loan ever time you make the minimum payment, but I have yet to hear of BK court that uses anything other than the original date the payday loan was taken out to determine the date of the loan.

[rrockinggramma]

ok do not pay them another penny. Go to your bank and put a stop on the auto withdraw. It may cost you a 25.00 stop payment fee but if you are filing, why pay them anything. They will call etc until you file, but just use your caller id and ignore them. I had 2 payday loans in my bk and both threatened me verbally and in writing with nothing short of death. But guess what, I am still alive and don't owe them a penny.

[SinkingFast]

Change banks.

Close the acct and change banks. Then they can't auto deduct.

You'd have to disclose the closed acct in your BK paperwork, but it's an acceptable reason. Not like you're trying to hide assets or anything.

[sinister]

We declared them on our BK

Change accounts or stop payment and claim on BK..we did for 3 of them and had no problem....or you could flush the $$$ down the toilet. Thats in a sense what you would be doing if you payed them.

[sofarindebt]

so what should I do?

my atty. made it very clear not to take out any cash advances after retaining him, but I figured this was okay since I am paying them back in full? Is there a chance I will be liable by the trustee to pay them back, calling it fraudulent?

[SinkingFast]

When I first joined here, the running comment was "Don't pay an attny until you're ready to file. Once you retain an attny, you're committed to filing BK. If you take a loan or use a CC after that it's fraud."

I told one attny I'd heard that and he said, "Not true. Just because you pay me money does not mean you're going to file BK. It just means you sought out legal advice."

He went on to say, as an example, our car needed repair and we charged the service bill. We had previously paid him a $100 retainer and we went ahead and filed BK within 90 days of that charge. Worst case that probably would happen is the Creditor would Object to that particular charge and we'd have to pay that money back.

Is that true??!! I'm not sure. We did not hire that particular attny, and we didn't use any form of Credit for 3 months before we hired our attny.

[9877donna]

my atty. made it very clear not to take out any cash advances after retaining him, but I figured this was okay since I am paying them back in full? Is there a chance I will be liable by the trustee to pay them back, calling it fraudulent?

sofarindebt,Did you tell your lawyer about these payday loans that you took out after you retained him? I would include the payday loans in the BK and hope for the best.The worst that could happen is you would have to pay them back.And you were going to do that anyway.
Good luck.
Donna