Need advice regarding my previous spending of severance pay

[keepinitreal]

I've been learning a lot reading here. Now I see potential problems lol.

In March 2009 I was laid off. In April I received a $17k severance check.

I put it in my wife's bank account, thinking we could use it for a down payment on an inexpensive home, and then sell our current home.

We couldn't qualify for a mortgage until our current home was sold, even though we had done this same thing twice previously (when we were both working).

So I decided to use the $17k to pay the combination of our bills that had the highest monthly payments. I paid off 3 of my wife's bills and saved $800 a month.

Now it's November and I'm getting closer to filing for Chapter 7. I don't want the trustee to take back the $17k and use it to pay my current creditors.

Any advice?

[tjs1970]

when did you take the 17k out and pay those other bills?

[keepinitreal]

I took the $17k out and paid those bills in April 2009.

[backtoschool]

You will have to wait about three to six months to file after paying the other creditors (unless they were family members in which case you would wait a year)

A preferential payment would not affect you though in theory. The trustee goes after the creditor for the money, not you.

[keepinitreal]

ok, thanks backtoschool. In theory it wouldn't affect me, but in reality what affects my wife, affects me lol.

My wife is the sole breadwinner for the time being, and I don't want to add more stress in her life by having her creditors that were paid off in April all of a sudden contacting her because they're her creditors again.

Trying to do upfront planning now to avoid adding stress to both of our lives in the future.

It's a relief knowing there are so many knowledgeable people on the forum who can give real-life advice.

[laurannm]

What backtoschool is saying is that if the trustee went after a creditor for preferential payment, it wouldn't affect your or your wife at all. That is strictly between the trustee and creditor, and once the trustee re-claims the preferential payments, the creditor cannot come after you for the reclaimed payments.

[keepinitreal]

ok, thanks lauranmn. My wife won't be filing Chapter 7, only me. I should have mentioned that originally

[backtoschool]

ok, thanks lauranmn. My wife won't be filing Chapter 7, only me. I should have mentioned that originally

So, did you give a chunk of money to your wife and then your wife paid creditors with it?

In that case you would have to wait a year from giving her the money to file since that would be seen as a preferential payment between you and your wife. It is possible the trustee could go after your wife for that money if you both are not filing.