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WALLSTREETESQ
WALLSTREETESQ, Attorney
Category: Bankruptcy Law
Satisfied Customers: 17222
Experience:  14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
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what exactly constitutes the 12 month look back period for

This answer was rated:

what exactly constitutes the 12 month look back period for bankruptcy? in other words, what are they looking for?

WALLSTREETESQ :

Hello I am a licensed attorney here to help you with your question, please review my response and do not hesitate to ask for clarificati on.

Customer:

hello


 

WALLSTREETESQ :

The look-back period is the period of time the bankruptcy trustee can examine prior to the filing of bankruptcy to discover improper transfer of assets or money to preferential creditors, insiders, or third parties. Under Chapter 7, the look back period is 90 days prior to the filing of the bankruptcy petition. The trustee has the power to set aside improper transfer of assets by the debtor to a creditor 90 days prior to the bankruptcy filing. The look back period for insiders, meaning a relative (or in the instance of corporation or partnership – general partners, directors, or officers) is 12 months (one year) prior to the bankruptcy filing. Thus, for transfers to insiders, the trustee can set aside or sue the debtor or creditor/insider to recover transfers deemed improper for a period of 12 months (one year) prior to the filing of the bankruptcy. If you have more assets than you can shield/protect from liquidation with exemptions under Chapter 7, consider Chapter 13, where debtors can “buy back” the nonexempt value from creditors through a payment plan.

WALLSTREETESQ :

This is a complicated area, as under the bankruptcy law a potential debtor is allowed to convert non exempt assets into exempt assets,

Customer:

so, just to clarify, lets say i have used a relatives credit card to run my business, and i pay it off in full, they will sue my relative?

WALLSTREETESQ :

So the trustee will be looking at preferential transfers in particular,


such as payments to some creditors, or gifts to relatives.

Customer:

what about if its only payments to their creditors? NO direct transfers to relative

WALLSTREETESQ :

Payments to some creditors of over $600 is a preferential payment and can be reversed.

Customer:

even if they aren't the creditors of the on who is filing for bankruptcy?

WALLSTREETESQ :

yes, any payments to creditors or friends or relatives will be examined.

Customer:

will they sue the individual or the creditor?

WALLSTREETESQ :

No, the trustee may try to reverse the payment and force them to give the money back to the Court to pay your creditors.

Customer:

I'm sorry, I'm a bit confused from your answers

Customer:

can you clarify please

WALLSTREETESQ :

if you file a chapter 7, and the trustee sees that you paid some non exempt monies to creditors, the trustee can force those creditors to give back the money.

Customer:

how can they force the money back?

WALLSTREETESQ :

They would bring a federal action against those creditors, or force you to pay the bankruptcy creditors in order for you to obtain a bankruptcy discharge.

Customer:

does that always happen or do they first examine the payments?

WALLSTREETESQ :

they will examine the payments, and will give you the opportunity to justify the payment.

Customer:

so if i was using the cards to conduct business is that justified?

WALLSTREETESQ :

it is possible but unlikely, if this is an issue consider a chapter 13, where if their were any past payments, you can put that debt into a chapter 13 plan and pay the creditors the amount due over 60 months.

WALLSTREETESQ and 2 other Bankruptcy Law Specialists are ready to help you