Many people who live in or around Rochester, MN are considering bankruptcy right now. If you are considering bankruptcy, watch out for this one issue that trustee’s look for all the time. They watch to see if people who file bankruptcy pay family members money owed to them in advance of filing bankruptcy. What is the big deal, you say, if you pay your parents back 10k within a year prior to filing a Chapter 7 bankruptcy? Well, it really isn’t a big deal to pay back your parents 10k. But this assumes you are not filing Chapter 7 Bankruptcy within a year of paying your mom and dad back.
However, if you pay your family members more than $600 within a year prior to filing Chapter 7 Bankruptcy, this is considered a “preference”. What the heck is a preference? When you file bankruptcy, if you paid MasterCard $1,000.00 before filing the Chapter 7 Bankruptcy and Visa got nothing, Visa will be pissed right? So a preference is a payment to an unsecured creditor to which the trustee can recapture from the creditor and disburse to all creditor pro rata. If it is a general unsecured creditor, the look back period is 90 days before filing the bankruptcy. If it is a family member, the look back period is one year before filing the bankruptcy.
Do you think mom and dad will find it funny when Chapter 7 trustee says, you owe the Chapter 7 Bankruptcy estate 10k so trustee can disburse 10k to all creditors pro rata? Trust me, they will not find it funny. So, if you are considering filing a Chapter 7 Bankruptcy in Rochester, keep these issues in mind!
When the time is right, or when you are ready, reach out to Minnesota’s NICEST bankruptcy law firm guaranteed or 100% off your fees* at www.kainscott.com. You will be so glad you did!