Legal Question in Bankruptcy in Virginia

Cashing a pre-petition check

I loaned some money to a person 5 months ago. As security, they gave me post-dated checks which are still valid. The dates of the checks do not overlap the pre-petition 90 day period. They filed Ch 13 about three weeks ago. I would like to deposit one of the checks, hopefully without violating the automatic stay or creating a preference transaction which might trigger a recovery action by the trustee.


Asked on 9/02/08, 2:38 pm

1 Answer from Attorneys
Daniel Press Chung & Press, P.C.

Re: Cashing a pre-petition check

While it is not a stay violation to present the check for payment, there are cases finding it to be a stay violation to retain the funds if the bank honors the check, and in any event the funds may be recoverable as an unauthorized post-petition transfer.

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Answered on 9/02/08, 4:42 pm


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