CC Min. Payment vs. Preferential Payment

[XploringOptions]

Hello again,

I plan on filing in early June, but I still want to pay minimum on CCs (one in particular) to show good faith. I did a large balance transfer on one card, and although filing in June will put me outside of 90 days, the minimum on the card is just over $500/month. I have only paid one payment after this transfer so far and I am wondering if continuing to do so will raise a preferential payment flag, as there are 2 more payments due before filing (totaling about 1k). What are your thoughts?

Thanks!

[laurannm]

We are in the same boat and according to our lawyer, if the required minimum payment is more than $500, then it is not considered preferential.

if I understand it correctly though, even if it was, it won't hold your BK case up (someone please correct me if I am wrong)

[Runnin on empty]

I would be weary. Even though the minimum is over $500, it is still showing a preferential payment. Considering that it is an unsecured debt (CC) there is no reason to "show good faith". Chances are, even if you attempt that good faith, they're still going to close your account, and will probably not open another one with you until you have the BK wiped from your report a decade from now.

I'd talk to your attorney about it, but honestly, why waste the money, they're (as in the CC company) just going to 'rub your nose in it' anyway.

[laurannm]

What if though you are paying all your other unsecured debt, along with the unsecured debt that requires $500+ minimum payments? Does that still make it preferential?

[magyar123]

Agree with Runnin on empty - why make a good faith payment if you intend to file in June. Save that money for your lawyer's fees.

[laurannm]

No I agree, but I had been making all payments through April. Since I am planning on filing in July, that would leave approx. just under 90 days since my last payment. I thought 90 days was the preferential payment window

[XploringOptions]

If the Trustee considers it preferential payment, I believe the worst that happens is they can request that money back from the creditor for the purposes of the estate I would rather that happen, than the creditor from which I did a balance transfer attempt to find the transaction fraudulent because I didn't show a good faith attempt at paying back the debt...I dunno.

[yoyoma51]

This scenario happened to my wife and I.

Our trustee considered this preferential and went back and got the $$ from the creditors.

The preferential payment thing is not a big deal. You don't get in any trouble or anything. The trustee gets a commission on the $$ he recovers, so he is happy to go after it.

But, like another person stated, why throw this money away in the first place? It is not like they are going to keep you as a customer.

You're just pi**ing away $$.

We learned the hard way. Save your money.

[XploringOptions]

I just don't want the CC company with which I did the transfer (to pay down other unsecured debt) to attempt to find me in fraud. Transfer was done on 2/27/2008, and I plan on filing in first week of June (advantageous timeline for prior 6 months in re means test). That is why I am paying them...is this foolish?

[lrprn]

I just don't want the CC company with which I did the transfer (to pay down other unsecured debt) to attempt to find me in fraud. Transfer was done on 2/27/2008, and I plan on filing in first week of June (advantageous timeline for prior 6 months in re means test). That is why I am paying them...is this foolish?

When a potential creditor objection is possible due to a recent cash advance or balance transfer, most lawyers will recommend that you pay that credit card at least once or twice before filing to build the case you borrowed the money in good faith.

There's a difference of legal opinion about whether a balance transfer should be treated the same as a cash advance regarding creditor objections. There was one recent case (can't find the link at the moment) where the bk court decided that the creditors can't put out all the advertising for 0% interest to entice debtors to balance transfer, then punish them for doing so by objecting to the discharge of that debt.

If you have retained a bk lawyer, then you should follow whatever advice he/she gives you about paying or not.

[XploringOptions]

I think I plan on going the Pro Se route, but I have met with several over consultations...and not one of them seems to have the same approach. I have one or two more consultations...enough for me to really chew on the best way to go about this.

Thanks ya'll