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 cfortunato Your Own Question
cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
14232603
Type Your Bankruptcy Law Question Here...
cfortunato is online now
A new question is answered every 9 seconds

A debtor has mostly business debts. The debtor owes $1,200

Resolved Question:

A debtor has mostly business debts. The debtor owes $1,200 to his brother. One month before filing bankruptcy, the debtor makes a $1200.00 payment to his brother to pay off the debt owed to him. I understand this is not a recoverable preference payment because it is below the threshold for a non-consumer debt bankruptcy. However, must this payment be reported on #10a of the Statement of Financial Affairs, and is it recoverable as a fraudulent transfer?
Submitted: 4 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 4 years ago.
Hi JACustomer,
Was this payment made in the ordinary course of business for the debtor, or was the payment made in anticipation of filing a Bankruptcy? In other words, would the payment have been made even if the debtor was not going to file a Bankruptcy?
Customer: replied 4 years ago.
It was paid in the ordinary course of business.
Expert:  cfortunato replied 4 years ago.

1) Then that loan repayment would not be entered anywhere on the Statement of Financial Affairs.

2) Such a repayment could not be deemed a "fraudulent transfer", which is the transfer of property without adequate compensation. Repaying a loan is not a transfer of property without adequate compensation.

 

I think this is what you wanted to know. If not, please let me know.
Thank you.

cfortunato and other Bankruptcy Law Specialists are ready to help you