Legal Question in Bankruptcy in California

Asset

My sister didn't work in 2006

I loaned her money in early 2005. She paid me back with her

taxes. I loaned her money again. She took a second on their house and paid me back

plus other debts. She has decided to file bankrupcy Feb 07. Her lawyer said that if I didn't send her $900 the

court could come after me because she paid me before her other debts.If this is true what can I do to stop it?


Asked on 1/03/07, 5:04 pm

2 Answers from Attorneys
Robert F. Cohen Law Office of Robert F. Cohen

Re: Asset

Payment within one year of her filing bankruptcy -- especially to her brother, an "insider" -- is considered a preference. Whether the BK trustee will want to bother collecting from you the $900 is a question mark.

Read more
Answered on 1/03/07, 5:31 pm
Carl Starrett Law Offices of Carl H. Starrett II

Re: Asset

Payments to "insiders" made within one year fo the filing of bankruptcy petition are "voidable". An "insider" be be a family member. In order to recover a voidable preference, the chapter 7 trustee would need to hire an attorney to file a lawsuit within the bankruptcy called an adversary proceeding. I view this scenario as possible but highly unlikely.

It is a little unusual for a debtor's attorney to make such a statement even if the trustee was likely to take such an action. If your sister hasn't worked and already borrowed agaist her home, she might not have enough $$ for a retainer. I suspect that your $900 is probably for the attorney's retainer and it sonds like and idle theat to me.

Read more
Answered on 1/03/07, 6:20 pm


Related Questions & Answers

More Bankruptcy Law questions and answers in California