Here’s an example of a preference—paying a favored debt before filing bankruptcy. If you know what it is, it’s usually not hard to avoid. Last week we explained why paying a creditor before filing bankruptcy could cause problems during bankruptcy. That’s especially true if the creditor you pay is one that you have personal reasons to favor. We explained the circumstances in which such a … Read More
You may feel like paying a special debt, and during this time of the year you may even get some extra money to do it. Maybe you shouldn’t. Last week we explained how giving a significant gift before bankruptcy could cause problems during bankruptcy. This also applies to selling something for much less than it is worth. Such a gift or sale might … 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
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
Preferences can be dangerous but can also present potential opportunities. So although not all that common, they’re worth knowing about.
Your trustee might be able to require a creditor to pay the trustee money you’d paid the creditor. Sometimes that’s good; sometimes not.