Payoffs before filing - preferential?

[PoorGrammyinBK7]

Preferential payments and what happens??



Payoffs of credit cards $15K, $6K and with a loan from a HELOC ($4K of the total that was taken out on the HELOC was cash - we took and used for legal fees, trip for lawsuit, car repairs, etc) Would that be a preference payment if made within 70 days /90 days of filing?


Any suggestions appreciated - except just "see a lawyer" We've done that - its not free here - or at least has not been for us but one time. Will probably do so again anyway, but just wanted to know from your experiences guys...

Still trying to decide between a 13 and a 7 - obviously would prefer to do a 7.

[woeisme]

The reason people say "see a lawyer" is because there are no real hard and fast rules with BK. One trustee will call something a preferential payment, another won't, so you really need someone who knows the local trustee and their practices to answer these kind of borderline questions, and even then it won't be a definitive yes or no, it'll be "the local trustee usually allows this" or "I've seen several cases in our local district where this was not allowed recently".

If the payments are seen as preferential, then the trustee will go after the creditor who got the preferential payment and get the money back and redistribute it in a manner he/she deems as non-preferential to all the creditors. The only reason you'd be involved is because in your case, the preferential transfer was to 1st mortgage. But I'm not sure how that would be looked at in your case, since you took an equity line of credit out on home and put some of that money back into the home.

How long ago did you make the transfers? That might make a difference as well. If it was last month it would probably be different than if it was 8 or 9 months ago... It really will probably depend on local practices though, so I just can't see you getting the answers you need here, you'll have to bite the bullet and find out, either through a local lawyer or maybe not even then, but waiting to see what happens when you actually file. Sorry, wishing you the best of luck and that it works out ok!

[Flamingo]

We had to make a list of all checks/disbursements paid out over a certain amount (I believe it was $1,000) and all deposits received in excess of I believe $500 for the period of one year prior to filing. This also applied to credit card transfers/cash withdrawals, etc. It all depends on what you are required to provide. What you are stating would have fallen in the realm of what we were required to do and we would have to list all those items in your posting. You can bet an explanation would be required with the large amounts you have listed and red flags raised.

It all depends on what you are required to do by your attorney and Trustee. As you have seen on here, everyone encounters something different.

[PoorGrammyinBK7]

The credit cards were debt remaining from a business we sold last year. Date posted was 4/28. We just took one advance and put it into the checking account and wrote the checks to the CC companies. (Ultra-stupid decision if we had been "planning bankruptcy" - since we could have simply discharged all of that CC debt if we were gonna BK!) We just wanted to get it consolidated into one payment and get our interest rate down, which it did). Two of the cards had just been raised to 18% and we got 6.5% with the HELOC. So it made sense. We were just trying to pay down our debt.