Insider Payments

[LucKyJacK]

I'm filing for chapter 7 bankruptcy soon, and I think I may have made a big mistake. Less than a year ago, I borrowed $800 from my brother and paid him back over a few months. I didn't know I shouldn't do this within a year of filing bankruptcy. I've been told I need to wait a year to file. I can't wait another year, and I don't know what i should do to fix this problem. How is this type of situation handled? How does this effect my bankruptcy? Any advice would be great.

[nomoneynomore]

I'd call and get a consultation with a lawyer, you can usually get a couple free ones to get a feel of things before paying. We had a couple of things we were really worried about. We had purchased a pickup from my dad for less than market value & were making payments on it. We were worried b/c we paid it off right before we filed and thought we had done a big no no. We did put it all on our forms and nobody ever batted an eye. MOST (not all) of the time, as long as you are honest and it's not a big amount trying to be hidden there is no problem. If they see several things they might start to wonder if you are up to something and inspect closer. I wouldn't worry about that too much as long as you are honest about it.

Good luck!

[AngelinaCatHub]

I'm filing for chapter 7 bankruptcy soon, and I think I may have made a big mistake. Less than a year ago, I borrowed $800 from my brother and paid him back over a few months. I didn't know I shouldn't do this within a year of filing bankruptcy. I've been told I need to wait a year to file. I can't wait another year, and I don't know what i should do to fix this problem. How is this type of situation handled? How does this effect my bankruptcy? Any advice would be great.

Lucky, I'm a pro on insider payments. About $5,500.00 worth. So, as I understand this, you borrowed a pittance of $800. You paid back in several months so no single payment was $600 or more. Probably a couple hundred a few times. If so, forget it. It is a nothing deal. Now if you paid a relative $4000 three months before filing, that is a lot different. 'Hub

[ColoradoBell]

I agree with Hub as my lawyer told me that as long as payments weren't for over $600 that it was probably ok.

Couple of questions:
Are the insider type payments (family friends) a year back and other payments just 3 months back?

And when you have your creditor meeting, do you take bank statements back a year or just 3 months...and should you take copies of checks and not just statements?

[LucKyJacK]

I explained the situation to my brother and he has agreed to give me back the money I paid back. I'll explain this to the trustee

[StartingOver08]

I explained the situation to my brother and he has agreed to give me back the money I paid back. I'll explain this to the trustee

DON'T do this. Having him give you the money back does not get rid of the insider payment. IF the Trustee decides he wants the $800, possible but not probable, then the Trustee will notify you and send a letter to your brother. Your brother can pay the $800 to the BK estate (remember this is only if the Trustee requests it). Then you can repay your brother after the discharge.

Check with your attorney. DO NOT take the money back.

[BCA2009]

DON'T do this. Having him give you the money back does not get rid of the insider payment. IF the Trustee decides he wants the $800, possible but not probable, then the Trustee will notify you and send a letter to your brother. Your brother can pay the $800 to the BK estate (remember this is only if the Trustee requests it). Then you can repay your brother after the discharge.

Check with your attorney. DO NOT take the money back.

I agree. This won't stop you from filing. The worst that will happen is your brother will have to pay the trustee the $800 and them you can pay him back after discharge. although for this amount of dollars, it probably won't be worth the trustee's effort. just let it ride and see what happens.

[LucKyJacK]

Ok I wont have him pay me back.