A big topic with bankruptcy cases is that of preference payments. An insider preference payment is any payment made within the past year to a family member, friend or business associate. If this type of payment was made during the past year, the Chapter 7 trustee has to recover the amount paid to the family member, friend or business associate, and share the funds with other creditors. In a Chapter 13 case, you have to repay to unsecured creditors at least as much as you paid during the past year to any family members, friends and/or business associates. If you are considering filing bankruptcy, you should not repay family members, friends, or business associates in advance of filing your bankruptcy.
Far too often, people file for bankruptcy unaware of what may happen and how bankruptcy will affect their debts and assets. Don’t fall into that trap.
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