Ten Reasons to Delay Filing Bankruptcy! Reason No. 6: Payment of Creditors

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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I've been a consumer bankruptcy lawyer for nearly 25 years. Since that time I have helped many people resolve their financial problems. I have been practicing law since 1986 and I am licensed to practice in all state and federal courts in the State of Louisiana. Because I am a sole practitioner, you know that your debt matters are being handled by me personally. In addition to my work with consumers, I am also frequently asked to speak at local seminars on bankruptcy law. I am member of the following organizations: • Louisiana Bar Association • National Association of Consumer Bankruptcy Attorneys • Bankruptcy Law Network My office is located at: 3920 General DeGaulle Drive, New Orleans, LA 70114 Telephone: (504) 368-4101

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