Question about paying family members money while living there...

[ad_25]

We are currently living with my parents. We are supposed to pay them $400.00 a month for rent since we are using their house and just about everything in it, however, we bought a 23 ft camper for us and the kids to sleep in at night. I read online on a California lawyer (which is where we're at) site that if you pay money to a family member before paying your debts it is considered preferential treatment and they can take that money from your family member to pay on your debts...is that correct?

If I am paying my parents $400.00 in rent, half the electric bill - $100.00 - and propane, food, and things like that, are they going to tell my parents they have to give that money to OUR debts? That just seems ridiculous! I hope I am not understanding that correctly..... Thanks for any input!
April

[lrprn]

I read online on a California lawyer (which is where we're at) site that if you pay money to a family member before paying your debts it is considered preferential treatment and they can take that money from your family member to pay on your debts...is that correct?

Giving your parents rent and paying for utilities is very different than shifting assets to your parents or trying to hide money by giving it them before you file.

If you don't have a written rental agreement listing the $400/month plus whatever utilities and other household costs you are responsible for that you and your parents have signed and had notarized, I would get that in place asap.

Be sure to run this situation by 3-4 experienced bankruptcy lawyers in your area during your free initial consults to discuss how this situation will fly with the local trustees.

Since your parents are your landlords, as long as you have something in writing and can prove to the court where the rent and other house-related payments have been going, you should be ok.

[ad_25]

Thanks, I will do that. We almost gave them everything for the month of October in advance and I read that last night....glad we waited.

[ad_25]

Do they question if you take out cash for any reason? If we take out say 200.00 a couple of times a month, are we going to have to provide receipts as to where that went even if we tell them it was for food or gas or something to that effect?

[Boscoe]

Just be reasonable with what you withdraw, I would keep it under $200 each time and be able to explain your expenses - not every detail, but generally. When you fill out the schedule J you will need to get detailed in order to complete this schedule.

[ad_25]

Okay, good to know....thanks. We're not trying to stash money, I just wanted to pay my parents cash or check and make it easier on them. But I suppose if I do the notorized document with them that should stand....

[ad_25]

One more question in regards to cash. Right now we have an appt next week to talk to a BK lawyer and other than our mortgage are current on the rest of our debt. Is it going to be questioned if we take out cash for any reason since we are current right now? Our home is in short sale right now and we have a buyer ready to purchase in about 3 weeks. It isn't 100% certain that we will file BK, it's just right now with my husband in between jobs, we do need cash from time to time for things and even before I lost my job and we had to move out of the house, we were struggling to pay everything. I am concerned that this is going to be questioned even if we wait 2-3 months to file...any input?