How could the trustee KNOW??

[DebtStinks]

How about if you made a withdrawal and kept the cash at home?

You have to claim cash on hand as an asset. To hide it would be considered fraud.

[DebtStinks]

I'm confused about the time thing. List everyone you paid more than $600 to in the 90 days prior to filing--I'm not looking to file until Oct or Nov, so, according to this, I should be fine, right? Then why do some people say you should wait a year if you've given money to anyone?

90 days for non-insiders and 1 year for insiders (family, friends, etc).

[JoeKing]

How about if you made a withdrawal and kept the cash at home?

[uneasy]

If you paid CitiBank and no other creditors - would the trustee go after those funds? IDK - maybe. It might depend upon the size of the repayment. That is why you have to list everyone you paid more than $600 to in the 90 days prior to filing.

BK is really a very technical legal event. That is why time can heal most of the issues, because that snapshot determines your 'current' position - in accordance with the law - NOT in accordance with reality! [/QUOTE]

I'm confused about the time thing. List everyone you paid more than $600 to in the 90 days prior to filing--I'm not looking to file until Oct or Nov, so, according to this, I should be fine, right? Then why do some people say you should wait a year if you've given money to anyone?

[JoeKing]

Can you include these withdrawals with your exemptions?

[dingdong]

i don't understand this--my friend is a creditor too. And if the trustee is looking out for the creditors, why go after my friend?? I understand that my friend shouldn't be the ONLY creditor to get $$ from me, but if I made a PP to CitiBank, would the trustee go after THEM too?

The reason the Trustee could go after your friend is because you can't pick one creditor over another to pay back.

A debtor could essentially "say" they have a loan with a family member for 10,000.00 and pay back that loan right before BK, and then perhaps that family member could "loan" that money back to the debtor once the BK was over. If debtors were allowed to do this, it would create an effective way of transferring assets in a BK case.

Can you imagine the amount of debtors who would suddenly have family loans if there were no protection for the creditors?

Not allowing PP allows the BK court to effectively and fairly distribute assets ( if there are any) to all creditors.

And due to human nature, debtors would most likely rather pay back family or friends rather than a large CC company.

So the Trustee, if he/she chooses, takes that money back to distribute fairly to all creditors, even the family members if they file a proof of claim in the BK case and there are assets to distribute.


That is my take on it anyway.

[StartingOver08]

i don't understand this--my friend is a creditor too. And if the trustee is looking out for the creditors, why go after my friend?? I understand that my friend shouldn't be the ONLY creditor to get $$ from me, but if I made a PP to CitiBank, would the trustee go after THEM too?

The Trustee is looking for preferencial payments and insider payments. If you paid an insider the Trustee wants the funds to be equally distributed among the creditors INCLUDING the Trustee fee. Remember, this is a business for the Trustee - they get paid a commission to find assets of yours. In my district the 'commission' is 10%. (I think there is another word for it, but in my mind when it is a percentage of the gross its a commission!).

The Trustee gets no money (something like $60 or $65) to handle a no asset Ch 7. So this incentive to find money is extreme for the Trustee - not only to show they are persuing their job per the BK code - but to actually get paid!

If you paid CitiBank and no other creditors - would the trustee go after those funds? IDK - maybe. It might depend upon the size of the repayment. That is why you have to list everyone you paid more than $600 to in the 90 days prior to filing.

BK is really a very technical legal event. That is why time can heal most of the issues, because that snapshot determines your 'current' position - in accordance with the law - NOT in accordance with reality!

[kathy4530050]

I believe the worst that can happen is you would have to pay the Trustee the 3000.00 back to get that money back in your BK estate.

Otherwise the Trustee can actually go after your friends for the money.

I can't remember, have you defaulted on any of your other CC's or loans?

I am not sure how the BK law looks at PP when you are current on everything else?

Say you payed them back 3 months ago and you were still paying all of your other debts 3 months ago, then you stopped paying everyone for example, today, I am not sure if the payment to your friends would be considered preferential since you were still paying everyone?

I did not have any issues with PP payments in my BK, so I am not a great source of wisdom on that subject.

It would seem logically that if you were paying everyone and then stopped that those payments wouldn't "Seem" preferential, but I am not sure how the BK laws address that situation.

You probably need a Guru to chime in to clarify.

Yeah. It was clearly a PP. I haven't paid on any cc's in many months. I am current on my present rent and utilities, but nothing else.

[kathy4530050]

You are allowed to pay anyone back after the BK on a voluntary basis.
Since you have already paid back an insider $3000 toward a debt - you can do any one of the following:

1) File the Bk and natually list the debt owed to your friend and the $3000 repayment, the Trustee may or may not go collect the funds from your friend. You may be able to work something out where they leave your friend alone for payment from you - like the Cats worked out something with their Trustee. The danger here is, most Trustee's are not known to be reasonable and you are taking a big chance by assuming you can work out something without involving your friend. The important part is, you must list both the debt and the repayment on the petition.
2) You could wait a year to file BK from the date of last repayment to your friend.

Remember, it is the Trustee's job to look out for creditors - not debtors. Their goal is to find $$ from whatever source and they know where to look because they do this day in and day out everyday. Their goal is to be fair to the creditors - not to the debtor.

i don't understand this--my friend is a creditor too. And if the trustee is looking out for the creditors, why go after my friend?? I understand that my friend shouldn't be the ONLY creditor to get $$ from me, but if I made a PP to CitiBank, would the trustee go after THEM too?

[dingdong]

I believe the worst that can happen is you would have to pay the Trustee the 3000.00 back to get that money back in your BK estate.

Otherwise the Trustee can actually go after your friends for the money.

I can't remember, have you defaulted on any of your other CC's or loans?

I am not sure how the BK law looks at PP when you are current on everything else?

Say you payed them back 3 months ago and you were still paying all of your other debts 3 months ago, then you stopped paying everyone for example, today, I am not sure if the payment to your friends would be considered preferential since you were still paying everyone?

I did not have any issues with PP payments in my BK, so I am not a great source of wisdom on that subject.

It would seem logically that if you were paying everyone and then stopped that those payments wouldn't "Seem" preferential, but I am not sure how the BK laws address that situation.

You probably need a Guru to chime in to clarify.

[StartingOver08]

You are allowed to pay anyone back after the BK on a voluntary basis.
Since you have already paid back an insider $3000 toward a debt - you can do any one of the following:

1) File the Bk and natually list the debt owed to your friend and the $3000 repayment, the Trustee may or may not go collect the funds from your friend. You may be able to work something out where they leave your friend alone for payment from you - like the Cats worked out something with their Trustee. The danger here is, most Trustee's are not known to be reasonable and you are taking a big chance by assuming you can work out something without involving your friend. The important part is, you must list both the debt and the repayment on the petition.
2) You could wait a year to file BK from the date of last repayment to your friend.

Remember, it is the Trustee's job to look out for creditors - not debtors. Their goal is to find $$ from whatever source and they know where to look because they do this day in and day out everyday. Their goal is to be fair to the creditors - not to the debtor.

[uneasy]

Good story! It's just that I have never been in the position of owing people money before and I really, really hate it. That's what's buggin my conscious. Paying people back may not be the legal thing to do, but if feels like it's the moral thing to do, and that's where I get stuck.

But now that I have already paid back $3,000 to a friend, do I have to wait a WHOLE YEAR now?

[dingdong]

I have a good example of how the Trustee can find things out.

At my 341, there was a couple who filed Ch 7 BK. They had on their petition a 1,000,000.00 personal loan ( yes one million) from a Dr/friend that lived a couple hours away.

This couple had a ranch where they raised birds and llamas.
The Dr/friend's lawyer showed up to the 341.

The couple failed to list any of the birds as assets/property.
The Dr. obviously knew what type and how many birds this couple had. Many were larger parrots and McCaws , some which were valued over 5000.00each ( they had hundreds of birds).

The Dr's lawyer grilled them for over 45 minutes, asking "Do you have a bird named BoBo, etc, how much is he worth?" Do you also have a Blue McCAw named.... you get the idea.

The Trustee then chewed them a new, you know what.

They were shaking in their debtor booties.

Scared all the rest of us waiting to death, as they were the very first to go.

They had their 341 continued and had to ammend their schedules.

So, point is, you never know who is going to show up and what they know and the Trustee has many sources to find things out about the debtor.
Some may just come out of the woodwork when you least expect it.

Best bet is to be truthful, swallow any mistakes and move on and realize you are most likely discharging a huge amount of debt and taking a small hit in your wallet is worth knowing you did things right and honestly.

Believe me, you will sleep much better knowing you have nothing to worry about because you didn't try and circumvent any issues in your BK

[SubPrimeME]

OP - Just wait, don't pay them till after your case is discharged. Why mess up your one chance to file? if you are dismissed, just think about how much worse off you will be!

If you are not honest now, you will regret this for a long, long time. The trustee's are very, very savy and they are to make sure things are honestly played out.

[Flamingo]

Hi again.

Another question. I know I'm not supposed to pay back money borrowed from family if I'm not paying other creditors. I haven't made any cc payments in months, but I haven't filed yet, and am wondering this--

If, before I file, I take cash out of the bank and pay people back in small(ish) increments, how could the trustee know?? I know there are all of those things about having to swear under oath that you didn't do this, but, hypothetically, let's just say I did. And IF I did, who would know? How COULD they know? If I take $500 out of the bank every now and then months BEFORE I file, would anyone ask what I spent that on?? Would anyone even know or ask what I was doing with my money 5, or 6 or 7 months before filing?

Thanks again.

I am Uneasy. . .

OMG - you don't know about the Trustee's crystal ball? (just joking....)

Put it this way, if you are thinking about what you are doing prior to filing BK and figuring out how to hide it, your attorney, trustee and their staff have long ago through of it also and are well aware of tactics taken that they can check out if they wish. Always be open, honest and forthright in dealings with your legal counsel and trustee and you will never run into any problems to get through your Bk filing. Best of luck to you.