Loan from Family

[Dee]

If a family member loaned or gifted me $1000-$2000, and I used that
money to pay a lot of small doctor bills and my property taxes which
are overdue, and I filed a Chapter 7 within weeks of making those
payments, would it jeopardize the bankruptcy? Would the Trustee be
angry that I used the money for doctor bills and property taxes?

 

[Brett Weiss]

It is possible that the Trustee could consider those payments a
"preference," meaning that you treated some creditors better than
others. The Trustee can contact each of these creditors and ask
for the money you paid them back, so it can be distributed among
*all* of your creditors.

--
Brett

*****************************************************************
* Personal Injury/Malpractice Bankruptcy *
* *
* BRETT WEISS, P.C. *
* Attorneys at Law *
* Maryland, D.C. and Federal Bars *
* (e-mail address removed) *
* http://www.erols.com/lawyer *
* *
* Small Business Estates & Estate Planning *
*****************************************************************

The Small Print: This response is for discussion purposes only.
It isn't meant to be legal advice and you shouldn't treat it as
such. If you want legal advice, speak with a local lawyer
familiar with your state's laws who can review *all* of the facts
and the law applicable to your situation.
*****************************************************************

If a family member loaned or gifted me $1000-$2000, and I used that
money to pay a lot of small doctor bills and my property taxes which
are overdue, and I filed a Chapter 7 within weeks of making those
payments, would it jeopardize the bankruptcy? Would the Trustee be
angry that I used the money for doctor bills and property

taxes?

 

[Dee]

It is possible that the Trustee could consider those payments a
"preference," meaning that you treated some creditors better than
others. The Trustee can contact each of these creditors and ask
for the money you paid them back, so it can be distributed among
*all* of your creditors.

Bummer. The 11 doctor/medical bills total $475, with the lowest
amount $14 for my dentist and the highest $130 to the outpatient
surgical center where I had my two carpal tunnel surgeries last fall.
The property taxes were due this past January, but they are letting me
do a payment plan, although as with credit cards, the interest keeps
the balances from coming down very much. They were originally around
3K, but are now down to $2200.

I am surprised to hear the Trustee would go after such tiny amounts as
my medical payments, and very surprised he or she would consider
paying property taxes as a preferential payment. I thought catching
up on delinquent property taxes would be considered the same as
catching up on mortgage payments. However, I would rather be
surprised here than in Bankruptcy Court, IF I even file, so I thank
you for the heads up.