He says 'Don't worry about it'

[LuvMyLawyer]

Here's the story:

Borrowed around $5000 from a relative last year (a legitimate loan), and have been paying back $300 a month, by check (which has 'loan repayment' written in the notes of the checks) for the last 9 months.

I put this loan and repayment information on the attorneys worksheet (in the section where they ask about transfers to relatives and friends).

I asked him, at the consultation, about this situation, and how likely it was the trustee would go after my relative for the money....his response was 'Don't worry about it, not going to be an issue'.

I get my petition read it over, note that the transfer is not on there, and point it out to him. Again, he says not to worry. I was really nervous, and just signed all the papers he put in front of me.

My 341 is a few weeks away, and I'm deathly afraid they're going to find out about this and dismiss me. I also don't like the possibility of being asked about transfers under oath (what would I say then!).

This is a pretty big firm (a Bankruptcy/divorce mill, with 4 offices). They look like they do 500+ BK's a year.

What does this guy know that I don't? Though the trustee has asked for no documents, I don't want anything ot go wrong with my case.

I've left messages/emailed him to amend my petition, with no response.

Would amending it now screw things up, going from no-asset to asset?, or are they basically the same procedure?

Would the trustee allow ME to pay the money to the estate over time, instead of pursuing my relative?

Would the fact that I can get proof (my relatives canceled check fromn when he gave me the loan) that I actually recieved the money from him (which, ironically, I used to pay bills since I didn't plan on going into BK) prove I wasn't trying to hide money?

If my lawyer won't cooperate, what should I do? Bring it up at the 341? Can I amend the petition myself? Will this delay my 341? Ugh.

Any advice would be appreciated!

PS: I can't afford another lawyer at this stage.

[StaciMM]

I don't know what to tell you. The only thing I can think of is to scrutinize everything else he has done on your paperwork. The right thing to do would be to amend your paperwork, I'm not sure what will happen in the end. While you were making payments for this loan, were you making other unsecured payments as well? If so, the trustee may have a hard time saying that paying this loan was preferential treatment on your part.

[Genenco]

Here's the story:

Borrowed around $5000 from a relative last year (a legitimate loan), and have been paying back $300 a month, by check (which has 'loan repayment' written in the notes of the checks) for the last 9 months.

Unless you have a written contract, which stipulates payment amounts and time and length, you have a "Silent Loan" Thus, nothing would be available to the trustee. EXCEPT your bank records if you have been asked to submit them.

I don't know if you put the money into the bank, if you did, I'd think you might have a problem, but if not, then no, your "Loan" is still hidden.

[LuvMyLawyer]

I don't know what to tell you. The only thing I can think of is to scrutinize everything else he has done on your paperwork. The right thing to do would be to amend your paperwork, I'm not sure what will happen in the end. While you were making payments for this loan, were you making other unsecured payments as well? If so, the trustee may have a hard time saying that paying this loan was preferential treatment on your part.

I was making payments to other unsecured creditors...

Anyone seen anything like this come up at their 341?

[LuvMyLawyer]

Unless you have a written contract, which stipulates payment amounts and time and length, you have a "Silent Loan" Thus, nothing would be available to the trustee. EXCEPT your bank records if you have been asked to submit them.

I don't know if you put the money into the bank, if you did, I'd think you might have a problem, but if not, then no, your "Loan" is still hidden.

My concern is that if the Trustee or US Trustee asks for my last few bank statements they'll see the $400 checks, I just don't know how likely that is.

[FloridaGirl]

The trustee is going to ask you if you paid any private debts over the last year. You will have to say yes because that is the honest answer. She will then know that you have been paying your relative $300 a month for the last 9 months. If she wanted to, the trustee could make your relative give the court the money you already paid them....$2700. I don't know how often this happens, but it is a possibility. It isn't fair, but the court doesn't view a relative as a "real" creditor. I don't know why because a relative can sue you over monies owed just as easily as a business can.

You have two choices. It is obvious that your attorney knows it could be an issue and that is why he left it out of your petition. He told you not to worry not because he knows it won't be a problem, but because he knows it won't even be on your petition to begin with. He expects you to lie when the trustee asks you about whether or not you owe money to anyone other than secured or unsecured creditors. That extra $300 a month has to be accounted for someplace and I am wondering what expenses he inflated, or created to eat up the $300 you are paying your relative.

You can keep silent about it if you want, and that will certainly get you off the hook. If your attorney has made up for the $300 in your expense sheet, then the trustee won't even know about the private loan. And hey, it's possible that your trustee won't even ask if you owe any money to family members. But if she does, and you say no, it would be a lie. If your trustee knows about the money you pay to your relative, they will probably make you stop because that is money which could be given to the court each month to pay your creditors. Guess what, $300 extra a month could throw you into a chapter 13. If you have no signed contract with your relative then you can't even prove it is a valid debt. What this comes down to is a moral choice you have to make. You can just let things be as they are if you want. Your attorney probably padded your expenses, as I said, and you will probably get away with this. Then you can keep paying your relative. But if you can't do this because of the dishonesty involved, then you will need to amend your petition. But if you choose the latter, it is likely that you will have to change several things because I don't know where your attorney could have hidden $300 dollars a month.

Like I said, it is a moral choice. It's obvious that you want to do the right thing or else you wouldn't have even asked the question. Just keep this in mind....you will be under oath. I think you could easily get away with this, its just a question of whether or not you are willing to.

[LuvMyLawyer]

That extra $300 a month has to be accounted for someplace and I am wondering what expenses he inflated, or created to eat up the $300 you are paying your relative.

.

What was happening was that I kept tapping into our emergency reserve to pay him...then I started to borrow from my wifes savings....until we were left with just enough for lawyers fees for a BK. I had been hoping to have a jump in income before it got to this, but it didn't pan out. The reason I borrowed was so I *wouldn't* have to drain our reserves (a month of expenses) in case I lost my job. I just looked at my petition and the expenses are all legit.

[FloridaGirl]

I don't think you need to worry. If you are paying back the loan with your wife's money, then it shouldn't be an issue.