What if my father loaned me the money for my attorney? Can I start paying him back?

[sjr1]

So, my hubby and I are going to be surrendering our house in our chapter 7. My father loaned us the money for the attorney (about $3000) so that we can file asap. Since we aren't going to be making mortgage payments, I was going to give my father $1000 a month for 3 months to pay him back for the attorney loan.

Can I start doing that now before I file (i'm gathering paperwork now)? Is that considered preferrential payment or are bk attorney payments not lumped in with the rest?

Also, now that we're not paying a mortgage payment, we will have a lot more money in our bank accounts. How do I protect this money? We need to save everything we can to prepare for our eventual move.

[JRScott]

Do not do it before you file or until after you are discharged.

Your father is considered an insider and even though he did loan you the money, the trustee would get it back if you tried to pay him. You will also need to list your dad on the forms. Just let him know off the record you'll be paying him back. Despite being discharged in the bankruptcy you can choose to pay back anyone you want to.

You need to have minimal money in your account at the time of filing. You can spend the money on doctor's visits, eye visits, car maintanance, new tires, etc. Things which will help you but you do need to limit the amount of money in the account on filing day, once you are past the filing day you can let it accumulate again.

[keepmine]

Yep, JR is right. No good deed goes unpunished. This will get your Dad sued in a heartbeat for the return of the money.
A cautionary note. How does not having a house payment affect your disposable income?

[CindyLou]

depending on your state you may have exemptions that cover cash.

[sjr1]

disposable income

since we are surrendering the house, we stopped making mortgage payments, thereby freeing up that money every month.

According to our attorney, Maryland courts still allow you to figure in your mortgage payment in the means test even if you plan to surrender. I made sure I asked that about 4 times and he assured me he has never had a problem with the courts about this issue.

[ThisCantGoOn]

My attorney did the same thing in Nevada, included the house payment that I'm "obligated" to pay as part of my budget for housing. The house will be surrendered and I will need to find one that cost about 1/2 that "obligated" amount.