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Loan repayments- fraudeulent conveyance?

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  • Loan repayments- fraudeulent conveyance?

    Hi. I am planning on filing Ch 13 in next 2 months and had a question about 2 money transfers. My father(oversees) gave us 30K over a 3 yr period 2007-09 for our business, kids school. We ended up sending back 7K in May 2009. In addition my mother in law lent us 4.5K which we repaid back over a 4 month period also in 2009.
    During this period we were current on our debt. We were struggling but did not fall behind on any debts until 2010?
    How would a trustee interpret these loan repayments? Are these fraudulent conveyances or would they be considered preferential payments?
    We expect our payment to be 15K or so over the 5 year plan, (excluding the 4.5+7)

    If they are considered fraudulent conveyances- will the 11.5 be added to the 15K or how is it handled? Would they contact my parents to get the money back?

    Any advice is appreciated.

  • #2
    The partial repayment of the loan is not a fraudulent conveyance. A fraudulent conveyance, in general terms, is an "unequal exchange for value" which can be done with the intent to hinder, delay or defraud or can simply be innocent.

    You were partially paying back a legitimate loan, were you not? The lender happened to be an insider. You did this more than one year ago. It is outside the preference window. You still owe money to the family members. Make sure each is listed on Schedule F.



    • #3
      Thanks for the feedback Des. That makes sense. Thanks a lot.


      • #4
        I have another question. I have been using my CCs the last few months and pay them off in full. I only charge household, gas ,car insurance, groceries, etc. No big purchases but about 2K per month. My question is I just realized that this could be preferential if I pay them off. I currently owe 2K and have paid 2K in the last month. I plan to file in early Dec.
        Should I pay these off or wait and run them through the BK? I always planned to pay them off and had bee using them out of habit. I had $ in my checking acct. Are these preferential if I pay them off or will the trustee see that that are basically liveing expenses? What should I do about the outstanding 2K balance. Thanks for you input.


        • #5
          If you habitually have paid them to date, and have your receipts or can get statements, you are clear. Also you are out of range of anything looking like you planned on doing wrong. It is the ninth month this year since 09.

          You are in better shape than most. 'Hub
          If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.


          • #6
            If you pay the cc down to $0 each month then you are paying "in the ordinary course" and payments made over the 90 preference (non-insider) technically cannot be recovered. However, this is an issue between the Trustee and the credit card company. The Trustee is going to see your bank statements. He is going to inquiry as to the payments made. He may or may not try to squeeze $$$ out of the credit card company. It just depends how greedy he is and whether or not the cc company will roll over. Sometimes they do, sometimes they don't

            Point of fact. . . if you owe $0.00 then you do not list the cc on Schedule F. HOWEVER there is a 50/50 chance the cc company will find out about the bk (if its Amex it is 100%) and then there is a 50/50 chance they will yank the card anyway. . . so do not be surprised if it happens.



            • #7
              Thanks for the replies. I have a follow-up question. Property tax bills are sent out 11/1. I do not think they are due in full till 3/31. If I need to file early in Nov and have 2-3K left in my checking account can I withdraw and send a cashiers prior to filing?


              • #8
                Ok I looked at my budget. I have less than I thought. I have $5K right now in my checking. Due to a potential judgement suit that is getting closer I want to make sure my money is safe for when I file in Nov/ Dec. I was thinking of withdrawing $4K in cash for atty fees. I will then get cashier's checks with receipts when I actually pay them. I do not want to get cashiers checks yet since I am not ready to retain my attorney yet. Has anyone else done this? As long as I keep receipts of how I spent the $4K will I be OK with the trustee? thanks for your feedback.


                • #9
                  I am planning to file within the next 3 or 4 months. I have a joint credit card debt with my ex-spouse and I was supposed to pay it as part of our divorce decree. I have not done so since I've learned that this would represent a preference payment to an insider. I understand that payments to credits of $600 or more would be preference payments. But what if, just to help her out and set up a payment plan she could afford on her own, I sent the CC company a check for something less -- say $550? Would this be a preference payment under the rules? Would the Trustee recover that payment from her?


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