Gift-giving, including selling something for much less than it’s worth, can be a problem in a latter bankruptcy. But usually it’s not. Most people filing bankruptcy have neither a need nor the desire to hide anything from their creditors. There’s no need because most people’s assets are already protected through state and federal laws. There’s no desire because most … Read More
You can avoid the risks involved with dealing with the Chapter 7 trustee if you resolve your preference problem through Chapter 13. Our last several blog posts have been about the problem of preference payments: 3 weeks ago we introduced the problem resulting from paying a favored creditor before you file bankruptcy 2 weeks ago we discussed avoiding the … Read More
Your lawyer can likely negotiate with your Chapter 7 trustee to prevent the forced repayment of your prior payment to a relative or friend. Our blog post two weeks ago introduced an uncomfortable problem: preference payments to a friendly creditor. (Please read that blog post before reading this one.) Then last week we discussed two possible solutions to this … Read More
A possible preference mess is the forced repayment of your pre-bankruptcy payment to a relative or friend. Here are two solutions. Last week’s blog post introduced an uncomfortable problem: preference payments to a friendly creditor. (If you haven’t already please read that one before reading further here.) The Solutions We ended that blog post by listing and giving short … Read More
Prevent the forced repayment of a pre-bankruptcy payment to a relative or friend. If other solutions don’t work, Chapter 13 usually will. Our last two blog posts have been about one of the more confusing parts of bankruptcy: the law of preferences. This law says that if a creditor takes or receives money from you within the 90 days … Read More
Preference law allows you to use money that you paid a creditor before bankruptcy to pay another creditor, one that you want to be paid. Last week we introduced the law of preferences. This law says that if a creditor takes or receives money from you within the 90 days before you file your bankruptcy case, the creditor may need … Read More
Filing bankruptcy stops garnishments and collections, but it also may be able to make a creditor return your money recently taken from you. Bankruptcy’s “automatic stay” is one of the most immediate and powerful benefits of filing bankruptcy. It immediately stops almost all creditor collection actions against you, your income, and your assets. See Section 362 of the U.S. Bankruptcy Code. … Read More
Giving a gift, or selling for less than true value, can cause problems when done before bankruptcy, but usually only if the amount is large.
Sometimes in bankruptcy doing the honestly right thing can cause you major problems. Making preference payments is a good example of this.
“Fraudulent transfers” have similarities to “preferences.” They are both worth understanding because they can cause unnecessary hassles.
You can put a “preferential payment” to work for you if you owe a “priority” debt–back child or spousal support, or recent income taxes.
Make your bankruptcy trustee work for you by retrieving your recent payments to, or garnishments by, creditors–to your benefit.
Prevent your trustee from giving you a big headache if you paid a debt to a friend or relative during the year before filing bankruptcy.
Avoid the frustrating surprise of having one your friendly creditors be challenged by your bankruptcy trustee with a preference action.
Preferences can be dangerous but can also present potential opportunities. So although not all that common, they’re worth knowing about.
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