29 Apr Ten Reasons to Delay Filing Bankruptcy! Reason No. 6: Payment of Creditors
In my recent article on reasons to delay the filing of a bankruptcy to avoid issues of preferential payments in pre-bankruptcy transfers, I addressed the right of the bankruptcy trustee to set aside preferential transfers.
Related to the preferential transfer issue, and another reason to possibly delay the filing of a bankruptcy is to permit a debtor to pay some of his unsecured creditors in preference to other creditors.
There are situations where a debtor wants to pay a debt to an unsecured creditor. This often happens where a creditor is a friend or relative.
Unfortunately, the fact that a friend or relative is the creditor does not give that friend or relative any greater right to a payment than any other creditor. Further, the failure to list the debt owed to the friend or relative could be considered an intentional concealment of the debt.
If you have already paid a debt to a friend or relative, it would be necessary to wait until the preference period has run to make sure that the payment is a preferential payment.
If the payment to the friend or relative has not been made, it would make little sense to pay the debt and delay filing. In a Chapter 7 case it is permissible to pay the friend or relative using post petition income.
Talk with an experienced bankruptcy attorney about these timing and preference issues.
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