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
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
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
Not a good idea. If you do your friendly creditor may have to turn over to the trustee whatever you paid it. So it wonât be so friendly.
Filing bankruptcy doesn’t just stop creditors’ present and future collection efforts against you. It might recoup money you’ve already lost.