How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask JoeLawyer Your Own Question
JoeLawyer
JoeLawyer, Attorney
Category: Bankruptcy Law
Satisfied Customers: 767
Experience:  Attorney in the practice of Bankruptcy Law since 1996
2990824
Type Your Bankruptcy Law Question Here...
JoeLawyer is online now
A new question is answered every 9 seconds

We are into our chapter 7 BK case, and we had paid my mom a ...

Customer Question

We are into our chapter 7 BK case, and we had paid my mom a preferential payment every month over the past year, and we knew she would be sued for that payment. My question is in the letter she received from the trustee it say: '' in the event this matter is not resolved, and the trustee finds in conducting discovery as part of the litigation process that there were other transfers made by the debtors within the 1 year period before BK filing or with regard to any transfers made for less than adequate consideration 2-6 years before BK filing, all such transfers are also subject to claims of recovery and the trustee reserves the right to include such transfers in recovery action. '' What does this exactly mean? I guess I am wondering does the trustee plan on getting all our records from the previous 6 years??? We have nothing to hide, I just want to be done!!!! When can I breathe easy, and know we can begin a fresh start?
Submitted: 8 years ago.
Category: Bankruptcy Law
Expert:  JoeLawyer replied 8 years ago.

Hi shoegirl:

Each state has its own laws about how far back fraudulent transfers can be pursued, so the trustee may be referring to your state's fraudulent transfer act. I do not know that the trustee would actually try to go back 6 years and recover money, though your state law may permit such an attempt.

Are you sure the payments are recoverable by the trustee? If the payments were made in the ordinary course of business, then sometimes the trustee loses on their attempt to deem the preferential payments as avoidable. So, if you can show the court that the monthly payment was a regular payment on an existing debt and was in the ordinary course of your financial business, the trustee may lose.

The implicition that the trustee may go back 6 years if you do not settle might just be a tactic designed to get you to not challenge whether the preferential payments are avoidable by the trustee, and may in fact make it worth your not pursuing a defense; i.e. it may be cheaper to settle with the trustee for the last year's worth of activity than potentially opening up the last 6 years worth of transactions.

I suggest asking your lawyer about these issues. I'm sure your lawyer has already reviewed the details, but just in case he or she didn't, it might be worth looking into.

I hope this helps and a positive feedback is always appreciated if this was useful to you.

Joe

LEGAL NOTICE: I am only licensed to practice law in certain state(s) and I cannot give legal advice to someone who does not reside in a state in which I am licensed, nor shall anything I say in the above answer or elsewhere on this site be deemed legal advice, even to someone who resides in a state in which I am licensed. Fees I receive for answering questions are paid for information, not for legal advice. This forum is designed to provide general information only, and information herein is not warranted to be correct or applicable in any way since laws may have been misinterpreted herein, since laws change from time to time, and since the impact of those laws on any particular situation varies. The information presented in this site shall not be construed to be formal legal advice nor the formation of an attorney-client relationship. Persons accessing this response are encouraged to seek independent legal counsel in their jurisdiction for guidance regarding their individual circumstances. Do not take any action or inaction based on information presented herein since it is informational and may not be accurate or applicable to you; it merely attempts to give you a basis of knowledge to help you formulate questions to ask a legal or other professional in a face-to-face meeting in your jurisdiction. Joseph Ross does not hold himself out to be a specialist or expert in any area, regardless of assertions made by any third party, and any implication of being an expert or specialist herein is made in error. I hope the information presented above is useful to you. Answer above is (c) Joseph Ross. All rights reserved.

JoeLawyer and 2 other Bankruptcy Law Specialists are ready to help you
Customer: replied 8 years ago.
Thanks for your answer to:
We are into our chapter 7 BK case, and we had paid my mom a preferential payment every month over the past year, and we knew she would be sued for that payment. My question is in the letter she received from the trustee it say: '' in the event this matter is not resolved, and the trustee finds in conducting discovery as part of the litigation process that there were other transfers made by the debtors within the 1 year period before BK filing or with regard to any transfers made for less than adequate consideration 2-6 years before BK filing, all such transfers are also subject to claims of recovery and the trustee reserves the right to include such transfers in recovery action. '' What does this exactly mean? I guess I am wondering does the trustee plan on getting all our records from the previous 6 years??? We have nothing to hide, I just want to be done!!!! When can I breathe easy, and know we can begin a fresh start?

I am just wondering if this sounds standard, and is a typical action of the trustee?
Expert:  JoeLawyer replied 8 years ago.

It is fairly common for trustees to go after payments made to friends and family members within the one year period prior to filing. It is much less common for a trustee to try to employ a state's fraudulent transfer act, but I am not surprised a trustee may threaten to do so to grease the wheels of a settlement for the one year period.

LEGAL NOTICE: I am only licensed to practice law in certain state(s) and I cannot give legal advice to someone who does not reside in a state in which I am licensed, nor shall anything I say in the above answer or elsewhere on this site be deemed legal advice, even to someone who resides in a state in which I am licensed. Fees I receive for answering questions are paid for information, not for legal advice. This forum is designed to provide general information only, and information herein is not warranted to be correct or applicable in any way since laws may have been misinterpreted herein, since laws change from time to time, and since the impact of those laws on any particular situation varies. The information presented in this site shall not be construed to be formal legal advice nor the formation of an attorney-client relationship. Persons accessing this response are encouraged to seek independent legal counsel in their jurisdiction for guidance regarding their individual circumstances. Do not take any action or inaction based on information presented herein since it is informational and may not be accurate or applicable to you; it merely attempts to give you a basis of knowledge to help you formulate questions to ask a legal or other professional in a face-to-face meeting in your jurisdiction. Joseph Ross does not hold himself out to be a specialist or expert in any area, regardless of assertions made by any third party, and any implication of being an expert or specialist herein is made in error. I hope the information presented above is useful to you. Answer above is (c) Joseph Ross. All rights reserved.