Preferential Payment-Please HELP!

[DebtStinks]

But the insider does have a financial relationship to the creditor which links them and I would think supports the agrument for an insider payment.

[OhioFiler]

The creditor was mom's creditor, not the filer's. The filer has no signed financial relationship with mom's credit card company.

But the asset was transferred to the bank. The bank is in possession of the asset. Tough one for me to get my brain around.

[lrprn]

If the debtor paid the creditor NOT mom, why would the trustee go after mom and not the creditor for the return of the preferential payment?

The creditor was mom's creditor, not the filer's. The filer has no signed financial relationship with mom's credit card company.

[DebtStinks]

My guess is it has to be viewed as an insider payment. Otherwise people could just start dumping cash assests by paying off the credit card debt of friends and family with only have to wait 90 days.

[2Bshinyandnew]

How was the transaction disclosed on the petition? Was mom listed as an unsecured creditor on Scedule F? The transaction would have been listed on Form 7 Section 2(c), correct?

I have a bad feeling about this. If the payment to your moms credit card card account was for the benefit of your mom, it may be possible for the trustee to still recover the payment from your mom because her credit card was not your debt. You owed that money to your mom, not her credit card. That mom borrowed the money from her credit card to lend to you is irrelevant. It could be viewed the same as if you deposited the $6K into her checking account. The fact that the money was credited to her credit card account and not a checking/savings account may not make a difference.

I hope I'm wrong.

In any case, the Trustee will hopefully be willing to settle and avoid involving your mom.

A payment can be both insider and preferential. The best way I have found to understand this is to look at the actual form on the petition.

[Mi Bankruptcy]

Ok thanks everyone! The payment was made to her card(Chase) for the full amount. What sucks is that we cashed out our retirement plan because we hated owing anyone money and then now we are paying it again. Oh well....I guess that proves that we were not planning our bk filing by any means.

I am not bringing up that they should be after chase because I feel like Chase might pay them the 6k and go after my mom and then of course we pay it all.

What a nightmare!

I think it would be better to have chase go after your mom then to have the Government go after her.. Either way, you should let her know so she doesn't get blindsided.

[OhioFiler]

How is it preferential if that long ago?

Its either "insider" (1 year)

or "preferential" (90 days)

or is there something in between?

This really is an interesting question.

HHM?

Good question.

Perhaps the courts don't recognize the debt to Chase as the petitioner's debt and the payment was made simply on the relative's (insider) behalf. That the court looks at the payment as a transfer to the insider by way of the lender.

[PoorGrammyinBK7]

They'll go after Chase not your mother if the payment was made directly to them. It's not an insider payment. It's a preferential payment.

How is it preferential if that long ago?

Its either "insider" (1 year)

or "preferential" (90 days)

or is there something in between?

This really is an interesting question.

HHM?

[OhioFiler]

They'll go after Chase not your mother if the payment was made directly to them. It's not an insider payment. It's a preferential payment.

[okiemom2008]

Sorry for the multiple posts....

Does anyone know if the trustee did decide to go after Chase, how hard would it be to get that money from Chase or do they have to hand it over?

[okiemom2008]

The lookback period for insider payments is one year. OP, I wonder why your attorney did not counsel you to wait a year to file?

I wonder that too. I asked him once but he told me that probably better to chance it since I quit paying my cards in November. And before I get a repo and bankruptcy on report.

[okiemom2008]

Ok thanks everyone! The payment was made to her card(Chase) for the full amount. What sucks is that we cashed out our retirement plan because we hated owing anyone money and then now we are paying it again. Oh well....I guess that proves that we were not planning our bk filing by any means.

I am not bringing up that they should be after chase because I feel like Chase might pay them the 6k and go after my mom and then of course we pay it all.

What a nightmare!

[PoorGrammyinBK7]

Can you make some kind of payment plan with the trustee to pay it yourself?

I am pretty sure that is what Angelina Cat and Hub did - a payment plan. You might PM them and ask.

[Willy13]

If they go after the credit card companies, would that then be a 90 day preference period?

[justbroke]

Did you pay the credit card or your Mom?

Good catch. I missed that fine detail!