• FreeAdvice has a new Terms of Service and Privacy Policy, effective May 25, 2018.
    By continuing to use this site, you are consenting to our Terms of Service and use of cookies.

Would this be considered preferential payment?

Accident - Bankruptcy - Criminal Law / DUI - Business - Consumer - Employment - Family - Immigration - Real Estate - Tax - Traffic - Wills   Please click a topic or scroll down for more.

LdiJ

Senior Member
Would it still be preferential if the money was in installment payments to purchase an asset of some kind? I am just curious.
 


Would it still be preferential if the money was in installment payments to purchase an asset of some kind? I am just curious.
Sorry, I missed this back in May.

Normally preferential payments cover unsecured debt. This is why you do not see Trustees going after the installment payments for secured vehicles or mortgages. So, if the security agreement for the purchase of "an asset of some kind" is 1) contemporaneous with the transaction and 2) valid under State law (properly recorded UCC lien, lien on title, etc.) then, in all likelihood there would not be a preference claim.

Des.
 
So here's an update. Went to the 341 meeting, was truthful to the trustee about my uncle and a few days later he ended up getting a strongly worded letter to remit $6,000 by July 10th. He called the law firm that represents the trustee to see if he could negotiate a deal and they basically told him to piss off.

I'm waiting to speak to my lawyer on Monday to see what our options are at this point for that money.

From your guys(or girls) experience what would you say our options are. The 10th is coming up quick so I want to try and get a jump on this before the weekend ends. I told him worst case scenario to pay it and I'll find a way to pay him back but he seems to want to try and get it lowered (he can afford it but it's more out of principal since he doesnt think he should be considered preferential since every single creditor was being paid and up to date until the day I filed and he was being paid the correct proportion of the debt % that he was supposed to get as well as everyone else - he is about 20% of my debt and he was getting paid about 20% of all the payments to creditors I made on a monthly basis)

Thanks for the help again.
 

justalayman

Senior Member
Hang tight for despritfreya but if I recall, she stated you can swap out exempt assets for his debt, that is if you have that much to swap, if you choose to anyway. .

As to your uncles feelings: the law determines what is considered preferential. It’s not the trustee picking on him nor is it anything against him. It’s just that he is your uncle.


Des did refer to a defense for your uncle back in post 13. I haven’t reviewed it because honestly, much of this is over my head.
 
Too bad the Trustee did not approach you first. In my neck of the woods such is what would have happened.

Talk to your attorney and maybe get a referral for your Uncle. If he can show that the payments were "ordinary course", or at least raise a valid issue that they might have been "ordinary course" then that opens to door to a "compromise settlement". Your Uncle should have his own independent attorney but there is nothing wrong with raising this issue with your attny to see how you (and your Uncle) should proceed.

Des.
 

LdiJ

Senior Member
If this is at all helpful, back when I was the CFO for a small local corporation a trustee tried to take back payments for products that we had sold on a COD basis...calling those payments preferential. We responded with a strongly worded letter that we did not agree and that we weren't going to return the money. We never heard back anything from the trustee.

Its possible that if your uncle sends back his own strongly worded letter that he did not receive more than his prorated fair share of your debt repayment that the attorney might back off.
 
Thanks for the great advice everyone heres the newest development.

I really dont want to put any burden on my uncle so i spoke with my lawyer last week and the plan is that he is going to propose to the trustee/trustees lawyer to settle for 4k if I can do it in a lump sum. I believe he is proposing that this week. In the meantime my uncle just called me today and said he got a summons from the Trustees lawyer saying he has 30 days to submit a motion or answer to the complaint asking for the 6k. What should I have him do while waiting for an answer about the lump sum proposal from me?
 
In the meantime my uncle just called me today and said he got a summons from the Trustees lawyer saying he has 30 days to submit a motion or answer to the complaint asking for the 6k. What should I have him do while waiting for an answer about the lump sum proposal from me?
Typical way we handle this but things could be different in your jurisdiction:

Once an offer is presented we ask the Trustee to give an "open extension to Answer the Complaint with a 10 day call". This can be done informally by email or formally by Motion. In essence one is asking for an extension to file an Answer beyond the 30 days allowed. If things don't pan out, the Trustee makes a demand and the defendant has 10 days to file an Answer or otherwise plead. Basically the parties are agreeing to a stand still until the matter is settled or it becomes apparent that there is no settlement possible. Run this past your attny.

Des.
 
That makes sense. Let me ask you a simple worse case scenario question. My proposal is turned down and they want the full 6k. Can my uncle just pay it and everything goes away or is there another step now that a summons has been issued? He is willing to do that if necessary and we just figure out me paying him back I just want to make sure there is no judgement against him.
 
Sponsored Ad

Top