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Is this considered a payment to a family member?

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    Is this considered a payment to a family member?

    My parents own a business as a corporation. I work very part time for them and I'm given a card to purchase fuel with and then I pay it back. Last year I paid my entire balance of $900 in December by means of a check written out to the corporation. If I file bankruptcy this year, will that be considered a payment to a family member which could possibly be reversed?

    #2
    This doesn't appear to be a transfer to an insider. If anything it's a payment for products/services received (i.e. payment for gas), or it's a payment to a creditor. If you didn't pay them shortly after incurring the debt, I'd think it would be treated as a creditor. As such, I would gather documents to support what the $900 was for, discontinue using the card and making payment to the company for at least 90 days prior to filing.

    There's a low likelihood this will be an issue, but if you don't have recent payments to them prior to filing, you nearly eliminate that chance.

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      #3
      This looks specifically like it "may" be an "ordinary course of business" transaction which is not a preference.

      The problem doesn't seem as though it was a contemporaneous exchange or under normal terms. Were you being reimbursed for gasoline purchases or mileage, or did they allow you to make those purchases and then you just paid them back?

      It's a fine line. The company may have been your creditor and you paid them without regard to your other (unsecured) creditors which may make this a preference. I don't know if this is an insider because a corporation is not your parents, friend, etc., but it is a creditor.

      You may need tax advice on this as well as bankruptcy advice. I don't know if these are expenses.
      Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
      Status: (Auto) Discharged and Closed! 5/10
      Visit My BKForum Blog: justbroke's Blog

      Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.

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